Flashcards
Accounting Unit 2 Ratio's
Cards in this deck (15)
- 1Net current assetcurrent asset/
current liability - 2Liquid capitalcurrent asset - inventory/
current liabilites - 3Gross Profit MarginGross profit/
revenue x 100 - 4Net profit marginNet profit/
revenue x 100 - 5Payable daysTrade payables/
Cost of Sales x 365 - 6Recievable DaysTrade Recievables/
Revenue x100 - 7Mark Up MarginGross Profit/
Cost Of Sales x 100 - 8Inventory TurnoverCost Of Sales/
Average Inventory - 9Average InventoryOpening Inventory + Closing Inventory/
2 - 10Return On Capital EmployedNet profit/
Capital Emplyed x 100 - 11GearingNet Current Liability/
Debenture + Equity (Net Assests) x 100 - 12What is the Prime Ratio for the Liquidity ratio's?1.5:1
- 13What Does Gearing measure?Risk of long term debt
<50% is low risk
50-75 % is warning
<75% is high risk - 14The higher the ratio's are the better apart from...Recievable Days and Gearing
- 15The Three Limitations of the ratio's are...- Doesn't count any externalities, only hard facts
- Compares old data that may be irrelevant
-Different needs for different businesses
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- A Levels Accounting Flashcards on Accounting Unit 2 Ratio's, created by Luca Sansone on 16/05/2014.
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- Luca Sansone
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