Analysing Financial Performance- formulas

Current ratio formula

Current assets/current liabilities =

Acid Test Ratio formula

(Current assets- stock)/current liabilities

Gearing formula

long term liabilities/ capital employed x 100

Gross Profit Margin

Gross Profit/revenue x 100 =%

Net profit margin

Net profit/ revenue x 100= %

ROCE

Net profit before tax/ capital employed x 100= %

Variance

Actual figure - budgeted figure = £

Working capital

Current assets - current liabilities =£

What are the liquidity ratios?

• Current ratio

• Acid test ratio

• Gearing ratio (thus is a debt ratio)

What are the profitability ratios?

• Gross profit margin

• Net profit Margin

• ROCE