# Financial accounting ratios

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- Created by: ElishaG
- Created on: 09-05-19 18:24

What is the formula for current ratio?

Liquidity ratio. Current assets/current liabilities.

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What is the formula for quick ratio (acid test)?

Liquidity ratio. (Current assets - inventory)/current liabilities.

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What is the formula for Inventory turnover?

Working capital ratio. Cost of goods sold/closing inventory.

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What is the formula for Inventory days?

Working capital ratio. 365/inventory turnover.

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What is the formula for Debtor days?

Working capital ratio. (Trade debtors/credit sales) x365

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What is the formula for Creditor days?

Working capital ratio. (Trade creditors/credit purchases) x365

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What is the formula for Credit purchases?

Cost of sales -PY closing stock + CY opening stock.

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What is the formula for working capital?

Working capital ratio. Inventory days + debtor days - creditor days.

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What is the formula for Gross profit margin?

Profitability ratio. (Gross profit/ sales) x100.

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What is the formula for Operating profit margin?

Profitability ratio. (Profit before interest and tax/sales) x100.

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## Other cards in this set

### Card 2

#### Front

What is the formula for quick ratio (acid test)?

#### Back

Liquidity ratio. (Current assets - inventory)/current liabilities.

### Card 3

#### Front

What is the formula for Inventory turnover?

#### Back

### Card 4

#### Front

What is the formula for Inventory days?

#### Back

### Card 5

#### Front

What is the formula for Debtor days?

#### Back

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