3697673
Description
Flashcards by Gemma Doney, updated more than 1 year ago
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Created by Gemma Doney
about 9 years ago
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| Question | Answer |
| Interpreting Financial Statements | Liquidity Profitability Financial Position Use of Resources |
| Interpreting Financial Statements Liquidity Current Ratio | Current Assets _______________ = X : 1 Current Liabilities Measures relationship between current assets and current liabilities |
| Interpreting Financial Statements Liquidity Quick Ratio or "Acid Test Ratio" | Current Assets-Inventories ________________________ = X : 1 Current Liabilities Test of immediate solvency- gives clear indication of health of a companies finance |
| Interpreting Financial Statements Financial Position Interest Cover | Profit from Operations _____________________ = X Times Finance Costs Assesses the safety margin cover of profit over its finance costs |
| Interpreting Financial Statements Financial Position Gearing | N-C Liabilities ________________________ X100 Total Equity + N-C Liabilities Ratio looks at whether company can pay its way in short term Looks at companies long term stability |
| Interpreting Financial Statements Profitability Return on Capital Employed (ROCE) | Profit from Operations __________________________ X 100 Total Equity + N-C Liabilities Expresses the profit in relation to capita; employed (Most effective ratio when interpreting accounts) |
| Interpreting Financial Statements Profitability Return on Total Assets | Profit from Operations __________________ X 100 Total Assets |
| Interpreting Financial Statements Profitability Return on Equity | Profit after Tax _______________ X 100 Total Equity |
| Interpreting Financial Statements Profitability Gross Profit Percentage | Revenue - Cost of Sales _____________________ X 100 Revenue Expresses gross profit margin as % in relation to revenue |
| Interpreting Financial Statements Profitability Expense / Revenue % | Specified Expense ___________________ X 100 Revenue Expense expressed as a % over revenue (compared year on year) |
| Interpreting Financial Statements Profitability Operating Profit % | Profit from operations _______________________ X 100 Revenue (Operating Profit- profit before finance costs and tax) |
| Interpreting Financial Statements Use of Resources Inventory Turnover | Cost of Sales ____________ = X Times Inventories Shows number of times in a year inventory is turned over |
| Interpreting Financial Statements Use of Resources Inventory Holding Period | Inventories __________ x 365 Days = X Days Cost of Sales Shows number of days inventories are held on average |
| Interpreting Financial Statements Use of Resources Trade Receivables Collection Period | Trade Receivables _____________ x 365 = Days Revenue Shows how many times on average trade receivables take to pay for goods sold by the company |
| Interpreting Financial Statements Use of Resources Trade Payables Payment Period | Trade Payables ______________ x365 = Days Cost of Sales Measuring days takes to pay trade payables |
| Interpreting Financial Statements Use of Resources Working Capital Cycle | Inventory Days + Receivable Days - Payable Days Measures time between payment of good received inventory and collection of cash from customers from goods sale |
| Interpreting Financial Statements Use of Resources Asset Turnover (Total Assets) | Revenue _____________ = X Times Total Assets Show efficiency in use of assets in generating revenue |
| Interpreting Financial Statements Use of Resources Assets Turnover (Net Assets) | Revenue _________________ = X Times TotalAssets - CurrentLiabilities Show efficiency in use of Net assets in generating revenue |
| Interpreting Financial Statements Use of Resources Assets Turnover (N- C Assets) | Revenue _____________ = X Times N-C Assets Show efficiency in use of N-C Assets in generating revenue |
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