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Gross profit margin
Gross profit/sales turnover x 100
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Net profit margin
Net profit/sales turnover x 100
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Return on capital employed
net profit/capital employed x 100
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Stock turnover
stock/purchases x 365
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Current asset ratio
current assets/current liabilities
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Acid test ratio
current assets-stock/current liabilities
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Debtors collection period
debtors/revenue x 365
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creditors payment period
creditors/cost of sales x 365
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Price earnings ratio
market price/earnings per share=x times
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Return on Equity
Profit accruing to ordinary shareholders/ordinary share capital + reserves x 100 = x%
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Earnings per share
Profit accruing to ordinary shareholders/number of ordinary shares = x pence
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Dividend per share
Total dividends payable or received/number of shares issued= x pence
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Dividend cover
Profit accruing to ordinary shareholders/dividends=x times
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Dividend yield
Dividend paid on ordinary shares/market price per share x 100 = x%
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Long term loans/capital employed x 100 = x%
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Interest cover
Profit before interest and tax/Interest = x times
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What is said to be the ideal for current ratio?
1.5 to 2:1
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What is said to be the ideal for acid test ratio?
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What does interest cover measure?
It measures the number of times profit covers any interest payable on loans
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What does gearing measure?
It measures the extent to which a business is dependent on borrowed funds for its financial stability
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What does debt collection period measure?
It measures the number of days it takes a business to collect any money owed by it's customers (its debtors)
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What does net profit margin measure?
It measures what percentage of a firm's sales revenue is net profit.
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What does return on capital employed measure?
It expresses the profit of the business as a percentage of the capital invested.
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Other cards in this set

Card 2


Net profit margin


Net profit/sales turnover x 100

Card 3


Return on capital employed


Preview of the front of card 3

Card 4


Stock turnover


Preview of the front of card 4

Card 5


Current asset ratio


Preview of the front of card 5
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