Business Formulas

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1. Activity: Fixed Asset Turnover

  • (Fixed Assets - Stock Turnover) ÷ 365
  • (Sales Revenue ÷ Fixed Assets) X 100
  • Sales Revenue ÷ Fixed Assets
  • (Fixed Assets + Sales Revenue) X 365
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2. Profitability: Gross Profit Margin

  • (Gross Profit ÷ Net Profit) X 100
  • (Gross Profit + Revenue) X 100
  • (Gross Profit ÷ Revenue) X 100
  • (Gross Profit ÷ Operating Profit) X 100

3. Solvency: Gearing Ratio

  • (Creditors after one year ÷ Creditors after one year+net assets employed) X 100
  • Cost of Sales ÷ Stock
  • Current Assets ÷ Current Liabilities
  • (Profit before tax + Interest) ÷ Interest

4. Activity: Debtor Turnover

  • Debtors ÷ 365
  • (Debtors ÷ Sales Revenue) X 365
  • Sales Revenue ÷ Fixed Assets
  • (Sales Revenue ÷ Debtor) X100

5. Liquidity: Acid Test

  • Current Assets - Stock ÷ Current Liabilities
  • Sales Revenue ÷ Fixed Assets
  • Current Assets ÷ Current Liabilities
  • (Net Profit ÷ Revenue) X 100

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