Finance

formulas and stuff...

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Describe the Gross Profit Percentage ratio
It shows the profit made from the buying and selling of stock
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What is the Gross Profit Percentage formula?
Gross Profit ÷ Sales x 100
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Describe Return on Capital Employed
Calculates how much money an investor will get back after a period of time
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What is the return on capital employed formula?
Net Profit ÷ Capital at start x 100
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Describe Net Profit Percentage
Shows the profit made once expenses have been paid by the organisation
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What is the net profit percentage formula?
Net profit ÷ Sales x 100
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Describe Current ratio (Working capital ratio)
Shows how able an organisation is to pay off its short-term debts
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What are advantages of ratio analysis?
Ratios help: compare current performance with previous records, compare a firm’s performance with similar competitors, monitor and identify issues that can be highlighted and resolved
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What are limitations of ratio analysis?
Ratio analysis information is historic – it is not current, ratio analysis does not take into account external factors such as a worldwide recession, ratio analysis does not measure the human element of a firm
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Define: 1. Profitability 2. Liquidity 3. Efficiency
1.How profitable a business is 2. How able a business is to pay its short-term debts 3. Shows if business is performing effectively and efficiently
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Name a user of financial info and their interest
Employees- to see whether or not the business is paying fair wages based on the profit it is making
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Name a user of financial info and their interest
Management- to see if decisions they have made have been effective. To enable planning for future so that the business can achieve its objectives
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Name a user of financial info and their interest
Trade unions- if profit is good, better working conditions and other benefits could be argued for
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Name a user of financial info and their interest
Government- to ensure the correct amount of taxation is being paid
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Other cards in this set

Card 2

Front

What is the Gross Profit Percentage formula?

Back

Gross Profit ÷ Sales x 100

Card 3

Front

Describe Return on Capital Employed

Back

Preview of the front of card 3

Card 4

Front

What is the return on capital employed formula?

Back

Preview of the front of card 4

Card 5

Front

Describe Net Profit Percentage

Back

Preview of the front of card 5
View more cards

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