finance in sports (Ratios)

What is Return on Capital Employed (ROCE)

• Profit b/t / Capital Employed x 100

• Calulates the profits generated by the total capital

• Increase: good, shows more money was earned by the capital

• What is Capital Employed?

• Total Assets / Current Liabilities

What is Operating Profit Ratio/Margin?

• Profit b/t / turnover x 100

• Calculates the operating profit per €1 turnover earned in an accounting period

What is Asset Turnover?

• Turnover / Capital Employed

• The efficiency a business’s assets is in making profit

• Increase: Good, return on investment

what is Gross Profit Ratio/Margin?

• Gross Profit / Turnover x 100

• Calculates profits earned on cost of sales

• Increase: Good, more profit on cost of sales

What is Operating/ Admin/ Distribution/ Selling Expense Ratio

• Operating/ Admin/ Distribution/ Selling Expense / Turnover x 100

• Operating/ Admin/ Distribution/ Selling Expense per €1 Turnover earned in an accounting period

• Increase: Bad, business is spending more

Inventory Turnover

• Cost of Sales / ((Opening Inv + Closing Inv)/2)

• The speed the inventory is sold at

• Increase: Good, Sale efficiency better

What is Receivable Days?

Acc Receivables / Turnover x 365

Length of time it takes for credit customers to pay what they owe

Increase: Bad, longer wait to be paid back

Whats Payble Days?

• Acc Payable / cost of sales x 365

• Time it takes for the business to pay what they owe suppliers

• Increase: bad, longer time to pay back

What is Inventory Days?

• Inventory / cost of sales x 365

• How long inventory is held for

• Increase, Bad inventory held for longer

What is Current Ratio?

Current Assets : Current Liabilities

Measures a business’s ability to pay bills, take out loans etc

Increase: Good, stronger ability to pay bills et

What is Quick Ratio?

(Current Assets - Closing Inv) / Current Liabilities

Measures a business’s ability to pay bills, take out loans etc

Increase: Good, stronger ability to pay bills etc

What is Dept Ratio

• Total Liabilities / Total Assets x 100

• Messures business’s total debt

• Increase: Bad, more debt

What is Gearing Ratio

• Interest bearing creditors / Equity x 100