100% satisfaction guarantee Immediately available after payment Both online and in PDF No strings attached
logo-home
Summary Accounting Ratios Cheat Sheet £5.49   Add to cart

Summary

Summary Accounting Ratios Cheat Sheet

1 review
 375 views  3 purchases

Accounting Ratios Cheat Sheet

Preview 1 out of 3  pages

  • November 6, 2015
  • 3
  • 2014/2015
  • Summary
All documents for this subject (1)

1  review

review-writer-avatar

By: Patrick95 • 8 year ago

avatar-seller
Geets
Profitability Ratios:

Operating Profit
↑ Return on capital employed (ROCE)
¿ × 100
Share Capital+ Reserves+ NonCurrent liabilities

Profit before preference dividends
↑ Return on shareholders’ funds (ROE)
¿ ×100
Share Capital+ Reserves

Gross Profit
↑ Gross Profit Margin
¿ ×100
Sales Revenue

Operating Profit
↑ Operating Profit margin
¿ ×100
Sales Revenue

Profit
Rate of return on investment
¿
Invested Capital



Efficiency Ratios:

Average Inventories held
↓ Average inventory holding period
¿ ×365
Cost of sales

Cost of sales
↑ Or Inventory turnover
¿
Inventory held

Average trade receivables
↓ Average settlement period for trade receivables
¿ ×365
Credit Sales Revenue

Credit sales revenue
↑ Or Trade receivables turnover
¿
Trade receivabes

Average trade payables
↑ Average settlement period for trade payables
¿ ×365
Credit purchases

Credit purchases
↓ Or Trade payables turnover
¿
Trade payables

Sales
↑ Asset turnover ratio
¿
Share Capital+ Reserves+ Non Current liabilities

Sales
↑ Sales revenue per employee
¿
Number of employees

, Average Average Average
inventory
holding
period
+ settlement
period for
receivables
- payment
period for
payables
=Operating
cash cycle




Operating Asset
profit
margin x turnover
ratio = ROCE




Liquidity ratios: Use financial ratios to assess liquidity and solvency

Current assets
↑ Current ratio
¿
Current liabilities

Current assets−Inventory
↑ Acid test ratio
¿
Current liabilities

Operating cash flows
↑ Cash ratio
¿
Current liabilities




Financial gearing occurs when a business is financed
externally. To finance growth and exploit tax
advantages (interest is tax deductible). Dangers of high
financial gearing: Less control over financing decisions.
Limited flexibility due to loan agreement restrictions.
Risk of bankruptcy.

Non−current liabilities
Gearing ratio/Debt to capital
¿
Share capital+ reserves+ longterm liabilities

Operating profit
↑ Interest cover ratio
¿
Interest payable



Investment Ratios:

Dividend announced for the year
↑ Dividend pay-out ratio
¿ ×100
Profit before preference dividend

Dividend per share /1−Dividend tax rate
↑ Dividend yield ratio
¿ ×100
Market value per share

The benefits of buying summaries with Stuvia:

Guaranteed quality through customer reviews

Guaranteed quality through customer reviews

Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.

Quick and easy check-out

Quick and easy check-out

You can quickly pay through credit card for the summaries. There is no membership needed.

Focus on what matters

Focus on what matters

Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!

Frequently asked questions

What do I get when I buy this document?

You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.

Satisfaction guarantee: how does it work?

Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.

Who am I buying these notes from?

Stuvia is a marketplace, so you are not buying this document from us, but from seller Geets. Stuvia facilitates payment to the seller.

Will I be stuck with a subscription?

No, you only buy these notes for £5.49. You're not tied to anything after your purchase.

Can Stuvia be trusted?

4.6 stars on Google & Trustpilot (+1000 reviews)

82191 documents were sold in the last 30 days

Founded in 2010, the go-to place to buy revision notes and other study material for 14 years now

Start selling
£5.49  3x  sold
  • (1)
  Add to cart