3.5 Profitability & liquidity ratio analysis
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12 Terms
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Capital
________ employed:= (non- current assets + current assets) current liabilities or non- current liabilities + shareholders equity.
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Capital employed
= (non-current assets + current assets) current liabilities or non-current liabilities + shareholders equity
3
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Liquid assets = Current assets
Inventories
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Gross profit margin, net profit margin and return on capital employed (%)
3 profitability ratios
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Capital employed
(Non-current assets + current assets) current liabilities or non-current liabilities + shareholders' equity. The total capital invested in the business
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Current ratio, acid test ratio and liquid assets
3 liquidity ratios
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Current assets - Inventories
Liquid assets
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(Gross profit / Sales revenue) x 100
Gross profit margin (%)
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(Net profit / Sales revenue) x 100
Net profit margin (%)
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(Net profit / Capital employed) x 100
Return on capital employed (%)
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Current assets / Current liabilities
Current ratio
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Liquid assets / Current liabilities
Acid test ratio