Ratio Analysis

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  • Created by: amyclaire
  • Created on: 01-06-19 19:05
ROCE
Ability to use capital to create profit, can be compared with return from other investments, around 15% reasonable for established company, increases in expenses may reduce operating profit and so ROCE
1 of 13
GPM
how successful at generating profits from sales
2 of 13
Capital gearing (investor suitability)
How much of all money invested from loans, increases shareholder risk as interest paid before dividends
3 of 13
EPS
Profitability per share of stock
4 of 13
DPS
Dividends shareholders receive per share
5 of 13
Yield
Earnings generated on investment based on current market value
6 of 13
Price/ earnings ratio
How much bigger market price to current earnings
7 of 13
Current ratio (solvency- ability to pay off short term debts)
Liquid assets to pay off short term debts, should be at least 1.5:1, if falling may be financing investments with short term liabilities, expensive
8 of 13
Acid test ratio
Ignores inventory, should be 1:1
9 of 13
Sales revenue to capital
How business has used capital invested to generate sales
10 of 13
Debt collection- Efficiency (management of assets/ liabilities)
Long= bad for cash flow, could be due to market competition
11 of 13
Creditor payment
Long period may damage relationship
12 of 13
Inventory turnover
How many days stock takes to be sold
13 of 13

Other cards in this set

Card 2

Front

GPM

Back

how successful at generating profits from sales

Card 3

Front

Capital gearing (investor suitability)

Back

Preview of the front of card 3

Card 4

Front

EPS

Back

Preview of the front of card 4

Card 5

Front

DPS

Back

Preview of the front of card 5
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