Profitability ratios (6)
Gross profit percentage
Operating profit percentage
Return on capital employed
Return on shareholder funds
Capital employed
Expense/ revenue %
Gross profit percentage
Gross profit ÷ revenue x 100
Operating profit percentage
Operating profit ÷ revenue x 100
Return on capital employed
Operating profit ÷ capital employed x 100
Return on shareholder funds
Profit after tax ÷ total equity x 100
Capital employed
Total equity + non current liabilities
Expense/revenue %
Specified expense ÷ revenue x 100
Liquidity ratios (2)
Current ratio
Quick ratio (acid test)
Current ratio
Current assets ÷ Current liabilities = x:1
Quick ratio (acid test)
Current assets - inventories ÷ Current liabilities = x:1
Efficency ratios
(Use of resources) (6)
Inventory turnover
Inventory holding period
Trade receivable collection period
Trade payable payment period
Working capital cycle
Asset turnover (net and non current)
Inventory turnover
Cost of sales ÷ inventories = X times
Inventory holding period
Inventories ÷ cost of sales x 365 = X days
Trade receivable collection period
Trade receivable ÷ revenue x 365 = X days
Trade payable payment period
Trade payable ÷ cost of sales x 365 = X days
Working capital cycle
Inventories days + receivable days - payables = X days
Asset turnover (net assets)
Revenue ÷ total assets - current liabilities = X days
Asset turnover (non-current assets)
Revenue ÷ non- current assets = X days
Financial position ratios
Interest cover
Gearing
Interest cover
Operating profit ÷ finance costs = X times
Gearing
Non- current liabilities ÷ non-current liabilities + total equity
Or
Total debt ÷ total debt + total equity
X 100%
