Key Financial Formulas and Ratios
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22 Terms
Straight line depreciation
(purchase cost - residual value)/life span of asset
Net current assets
current assets - liabilities
Total assets
net fixed assets + net current assets
Reducing balance depreciation
historical cost - accumulated depreciation
Cost of sales
opening balance + purchases - closing balance
Revenue
price x no. of products sold
Gross Profit
Sales - Cost of goods sold
Net Profit
Gross Profit - Expenses + income
Capital
Assets - Liabilities
Net Assets
Capital Employed
Gross Profit Margin
(Gross Profit / Sales) x 100
Net Profit Margin
(Net Profit / Sales) x 100
Return on Capital employed
(Profit / Capital Employed) x 100
Capital employed
share capital + retained profits + loan capital
Current Ratio
Current Assets / Current Liabilities
Quick Acid Test ratio
(Current Assets - Stock) / Current Liabilities
Working capital
Current assets - Current liabilities
Net assets
Fixed assets + Working capital
Break-even point
Total fixed costs / Contribution
Contribution
Selling Price - Variable Costs
Total costs
fixed + variable costs
Shareholders' wealth
Total assets - total liabilities