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A collection of ratios and formulas from Gowthorpe - Business Accounting and Finance
Performance RatiosGross Profit Margin | Net Profit Margin | Return on Capital Employed (ROCE) |
Efficiency RatiosFixed Asset Turnover | Revenue / Fixed Assets | Inventory Turnover | Cost of Sales / Average Inventory | Inventory Turnover in Days | Average Inventory / Cost of Sales * 365 | Trade Receivables Turnover | Average Trade Receivables / Revenue on Credit * 365 | Trade Payables Turnover | Trade Payables / Purchases * 365 |
LENDING RATIOSGearing | Debt / Equity | Interest Cover | Profit before Interest and Tax / Interest |
| | Liquidity RatiosCurrent Ratio | Current Assets / Current Liabilities | Quick Ratio | Current Assets - Inventories / Current Liabilities |
Investor RatiosDividend Per Share | Dividend for the Year / No. of Shares issued | Dividend Cover | Profit after Tax / Dividend | Earnings Per Share | Profit after Tax / No. of Shares | Price Earning or P/E | Price of Share / Earnings Per Share |
Profit after Tax refers to amount available to give to oridinary shareholders. Premium not included. | | Terms of AccountingRecognition Revenue is not the same as received and Expenditure is not the same as cash paid. | Accruals (Matching) Estimating the value to be paid and adding that as an expense in the Financial Statements and making any adjustments later on. | Bad & Doubtful Debts Bad & Doubtful Debts are added to Expenses in SFP. However, Doubtful debts are deducted from Receivables in Income Statement | Net Realisable Value The value inventory holds (not cost price or selling price) |
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