Which of the following is not classified as an efficiency ratio? CREDITOR DAYS/ DEBTOR DAYS/ STOCK TURNOVER RATIO/ ACID TEST
ACID TEST
Firm X has cost of sales valued at $500,000. The company started the trading year with stock worth $150,000. At the end of the trading year, Firm X's closing stock was valued at $50,000. What's Firm X's stock turnover ratio in times?
5 times
Which of these firms is most likely to have the highest stock turnover ratio? Carrefour, IKEA or Rolex?
Carrefour because shelves are sold at a much faster rate than watches or furniture
Which financial ratio calculates the time taken by a business to collect money from customers who buy items on credit? CREDITOR DAYS/ DEBTOR DAYS/ STOCK TURNOVER RATIO/ ACID TEST
DEBTOR DAYS
What is the correct formula for calculating the creditor days ratio?
(Creditors ÷ Cost of goods sold) × 365
What does an increase in the creditor days ratio suggest is happening in the business?
The business has delayed making payments to its suppliers
What is the correct formula for calculating the gearing ratio?
(Non current assets/capital employed)x100
A business has long-term borrowings of $10 million and has capital employed of $30 million. What is the firm’s gearing ratio?
33.3%
What does a fall in the creditor days ratio suggest for the business?
A worsening of payment terms with its suppliers
What is the correct formula used to calculate the debtor days ratio?
(Debtors ÷ Sales revenue) × 365
