Share Ratios
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Formula of GPM
Gross profit/sales x 100
Formula of NPM
Net profit/ sales x 100
Formula of ROI
Net profit/capital employed x 100
What are the two liquidity ratios.
1) Current ratio, 2) Acid test ratio.
Debt: Equity is also known as the ........ ratio.
Gearing ratio
What are reserves?
When a business has money left over at the end of the year.
Limitations of ratio analysis- Name two
Changes to staffing, valuation of assets, changes in business environment, other economic variables.
Formula of current ratio.
Current assets: Creditors falling due within 1 year
Formula of acid test ratio.
(Current assets- closing stock): creditors falling due within 1 year
Explain the term debt/equity ratio.
Debt = borrowed money. Equity= Investment from owners/shareholders.
