Interpretation of Ratio Analysis

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Current Ratio
Whether bus can pay debts from assets turned into cash in year / 1.5 - 2.0 = good, below 1 = bad
1 of 13
Acid Test
Warning sign of liquidity problems for bus holding stocks / less than 1 = bad
2 of 13
Operating Profit Margin
How efficiently bus turns sales into profits
3 of 13
Gross Profit Margin
Whether bus. can 'add value' to production process / higher better
4 of 13
ROCE
Amount of operating profit bus generates from total capital employed within bus.
5 of 13
Asset Turnover
R/ship between rev & total assets employed / making assets work hard to make sales
6 of 13
Stock Turnover
E.g. figure of 365 means turning stock into sale everyday - higher than avg = poor inventory management
7 of 13
Payables Days
Estimates avg time taken for bus to settle debts with trade suppliers / higher the better - taking full advantage of time given
8 of 13
Receivables Days
Time taken for trade debtors to pay bills / low generally better
9 of 13
Gearing
Proportion of finance provided by debt relative to finance provided by equity
10 of 13
Dividends per share
Value of total dividend per issued share for year
11 of 13
Dividend Yield
Get sense of return on investment
12 of 13
EPS
Overall profit generates for each share in existence over particular period
13 of 13

Other cards in this set

Card 2

Front

Acid Test

Back

Warning sign of liquidity problems for bus holding stocks / less than 1 = bad

Card 3

Front

Operating Profit Margin

Back

Preview of the front of card 3

Card 4

Front

Gross Profit Margin

Back

Preview of the front of card 4

Card 5

Front

ROCE

Back

Preview of the front of card 5
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