This is the only sets of formulas you will need in order to ACE your exam. All these formulas are covered in the MAC 3702 syllabus. These formulas are in colour in order to make it easier to understand and read.
Growth/ movement ratios Gross profit margin
Current year - Prior year Gross profit from ordinary activities
Prior year Sales from ordinary activities
Operating profit margin Net profit margin
Operating profit Net profit after tax
Sales from ordinary activities Sales from ordinary activities
Earnings before interest and after tax
Total assets
EBIT x (1 - tax rate)
Total assets
, Operating profits = Profit before investment income
Operating profits
Ordinary shareholder’s earnings Operating assets Net income after short term interest
Ordinary equity Capital employed
Ordinary shareholder’s earnings = Capital employed = Total s/h interest + Long-term funds
Profit after tax OR
- Outside share profit Income from other assets Capital employed = Total equity & liabilities – Current liabilities
- Preference dividend Other assets
return the owners are in fact
receiving when using outside funding Financial leverage effect Leverage ratio
ROE
return owners would receive if ROE - ROA ROA
they contributed all the funds themselves
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