A collection of ratios and formulas from Gowthorpe - Business Accounting and Finance
Gross Profit Margin
Net Profit Margin
Return on Capital Employed (ROCE)
Fixed Asset Turnover
Revenue / Fixed Assets
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
Debt / Equity
Profit before Interest and Tax / Interest
Current Assets / Current Liabilities
Current Assets - Inventories / Current Liabilities
Dividend Per Share
Dividend for the Year / No. of Shares issued
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 Accounting
Revenue is not the same as received and Expenditure is not the same as cash paid.
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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