Financial Data

Operations Management and Balance Sheets, Profit and Loss Accounts

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5 types of financial ratios

5 Financial Ratios: 

1. Acid Ratio Test

2. Efficiency

3. Profitability

4. Liquidity 

5. Shareholders 

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Financial Ratio Equations: Profitability

Profitability measures the efficiency of a business on generating a return on the capital invested. 

Gross Profit Margin: is gross profit as a % of sales revenue 

Gross profit / sales revenue  X 100

Net Profit Ratio: indicates total profit after all expenses have been deducted

Net Profit / Sales Turnover X 100

ROCE: is the % return on capital invested in the business. Ratio shows how well a business manages its capital

Net Profit /  Capital Employed X 100 


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Comments

eleanor

Acid Test is a liquidity or solvency ratio

Daniel Wicks

This is great! However, have you completed any revision cards for the other types?

Thank you

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