Monitoring The Business (Formula) (Ratios)
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9 Terms
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Gross profit Margin
Gross Profit/Sales x 100
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Net profit Margin
Net Profit/Sales x 100
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Capital Employed
Ordinary share capital + retained earnings (reserves) + long term loans + preference shares
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Return On Investment (ROI)
Net Profit/Capital Employed x 100
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Current Ratio (working capital ratio)
Current Assets : Current Liabilities
must be at least 1.5:1
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Acid Test Ratio
Current Assets - Stock : Current Liabilities
Must be at least 1:1
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Debt Capital
long term liabilities + preference shares
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Equity Capital
ordinary share capital + reserves/retained earnings
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Debt/Equity Ratio
Debt Capital : Equity Capital
Note 
Flashcards (30)