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Ratio Analysis Notes

Accounting Notes > Principles of Accounting Notes

This is an extract of our Ratio Analysis document, which we sell as part of our Principles of Accounting Notes collection written by the top tier of Acca students.

The following is a more accessble plain text extract of the PDF sample above, taken from our Principles of Accounting Notes. Due to the challenges of extracting text from PDFs, it will have odd formatting:

List of Financial Ratios Profitability

1. 2.

Gross Profit Margin =
Gross Profit Markup =

GP / Sales x 100 GP / CGS x 100

3. 4.

Net Profit Margin Net Profit Markup

=
=

5. ROCE
*Capital Employed

NP / Sales x 100 NP / CGS x 100

=
=

PBIT / *Capital Employed x 100 Ord. shares + Pref. shares + Reserves + Long term debts

=

=
CA / CL (CA - inventories) / CL

Liquidity

1. 2.

Current ratio Quick ratio

Efficiency

1. Inventory turnover rate

=

CGS / average inventory (answer in times)

2. Debtor collection period

=

Average debtors / Credit Sales x 365 days

3. Creditors ratio

=

Average Creditors / Credit purchase x 365 days

1. Earnings per share (EPS)

=

(PAT - Pref.dividends) / no. of Ord. Shareholders

2. P/E ratio

=

MV / EPS

3. Dividend Yield

=

DPS / MV

4. Dividend Cover proposed

=

(PAT - Pref.dividends) / Ord. Dividend paid and

5. =

(Long term Loans + Pref. Shares) / Capital Employed

Or

Prior charge capital / Total Capital

Investors

Gearing

Abbreviations CA = current assets CL = current liabilities P/E = price to earnings ratio DPS = Dividend per Share

GP = Gross Profit NP = net Profit EPS = earnings per share CGS = cost of goods sold PAT = Profit after Tax MV = market value per share PBIT = Profit before interest and Tax

Principle of accounts by Sir Qubair Salim Chartered Certified Accountant. Contact# 0336-2311246 Email: qubair accamail.com

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