MASTER EQUATIONS

Shares and capital, depreciation, debt and gearing, income statement, ratio analysis (profitability, solvency, efficiency, investment), cash flow statement

shares to issue

total capital to raise ÷ nominal value per share

issue price

nominal value ÷ share premium

new shares in bonus issue

existing shares x (first number ÷ second number of ratio)

cash raised in rights issue

new shares x issue price

straight-line depreciation

(cost - residual value) ÷ useful life in years

reducing balance depreciation

net book value x depreciation rate (%)

net book value

original cost - total depreciation charged

gearing ratio (%)

(long-term debt ÷ (long-term debt + share capital + all reserves) x 100

interest cover

net profit before interest ÷ annual interest charge

gross profit

turnover - cost of sales

cost of goods sold

opening inventory + purchases - closing inventory

net profit

gross profit - operating expenses

retained profit

net profit - tax - dividends

ROCE (return on capital employed) %

(net profit before tax and interest ÷ (equity + long-term debt)) x 100

net profit margin (%)

(net profit before tax ÷ turnover) x 100

gross profit margin (%)

(gross profit ÷ turnover) x 100

current ratio

current assets : current liabilities

acid test (quick ratio)

(current assets - inventory) : current liabilities

debt collection period

(receivables x 365) ÷ annual credit sales

creditor payment period

(trade payables x 365) ÷ annual credit purchases

capital gearing (%)

(long-term debt ÷ all finance) x 100

EPS (earnings per share)

profit after tax ÷ number of ordinary shares in issue

DPS (dividends per share)

total ordinary dividends ÷ number of issued ordinary shares

dividend yield (%)

(DPS ÷ current market price) x 100

P / E ratio

current market price per share ÷ earnings per share

operational cash flow

net profit + depreciation +- changes in working capital

net cash flow

operational cash flow - capital expenditure +- financing

working capital

current assets - current liabilities