Financial ratios Overview of terms related to capital, profitability and liquidity ratios 4.5 / 5 based on 3 ratings ? Business StudiesFinanceIGCSECIE Created by: Antoinette BreutelCreated on: 06-09-12 14:11 Working capital Current assets - current liabilities; used to pay short-term debts 1 of 11 Net assets Fixed assets + working capital; shows the net value of all the assets owned by the business 2 of 11 Shareholders' funds The total sum of money invested into the business by the owners of the company 3 of 11 Capital employed Shareholders' funds + long-term liabilities; the total long-term and permanent capital of the business used to pay for the net assets of the company 4 of 11 Profitability A business's ability to generate earnings as compared to its expenses during a specific period of time 5 of 11 Liquidity A business's ability to pay back its short-term debts 6 of 11 Gross profit margin Gross profit / sales turnover x 100 7 of 11 Net profit margin Net profit / sales turnover x 100 8 of 11 Return on Capital Employed Operating profit / capital employed x 100 9 of 11 Current ratio Current assets - current liabilities 10 of 11 Acid test ratio Current assets - stocks / current liabilities 11 of 11
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