Ratios Revision PDF
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Uploaded by ProvenAspen
Liverpool John Moores University
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Summary
This document reviews key financial ratios, including liquidity, leverage, profitability, and efficiency ratios. It outlines formulas for calculating these ratios and explains the components of current assets and liabilities.
Full Transcript
Assests = liabilities + equity Capital Employed = total assets – current liabilities Liquidity Ratios Current Ratio = Current Assests / Current Liabilities Quick Ratio = (Current Assets - Inventory) / Current Liabilities Cash Ratio = Cash / Current Liabilities Leverage Ratios Debt-to-Equity R...
Assests = liabilities + equity Capital Employed = total assets – current liabilities Liquidity Ratios Current Ratio = Current Assests / Current Liabilities Quick Ratio = (Current Assets - Inventory) / Current Liabilities Cash Ratio = Cash / Current Liabilities Leverage Ratios Debt-to-Equity Ratio = Total Liabilities / Equity Debt-to-Assets Ratio = Total Liabilities / Total Assets Profitability Ratios Gross Profit Margin = (Gross Profit / Revenue) x 100 Gross Profit = Revenue – COGS Efficiency Ratios Inventory Turnover = COGS / Average Inventory COGS = Opening Inventory + Purchases - Closing Inventory Average Inventory = (Opening Inventory + Closing Inventory) / 2 Receivables Turnover = Revenue / Average Receivables Payables Turnover = Purchases / Average Payables Asset Turnover = Revenue / Total Assets Operational Ratios Inventory days = Closing inventory / COGS Payable days = Payable due under one year / Purchases Recieveable days = Recievables / Revenue Current assests (what the company own) Closing Inventory Receivables Prepayment Cash in the bank Current Liabilities (what the company owe) Bank overdraft Bank loan due within one year Accruals Payables due under one year
