Financial Ratios (HSC SSCE Business Studies): Flashcards
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Practise the cards
10 cards from this deck
Liquidity
Liquidity
Ability to meet financial commitments in short term (<12 months)
Current ratio formula
Current ratio formula
Current assets ÷ Current liabilities
Ideal current ratio
Ideal current ratio
2:1 (sound financial position)
Gearing
Gearing
Proportion of debt & equity used to finance business activities
Debt to equity ratio formula
Debt to equity ratio formula
Total liabilities ÷ Total equity
Gross profit ratio formula
Gross profit ratio formula
Gross profit ÷ Sales
Net profit ratio formula
Net profit ratio formula
Net profit ÷ Sales
Return on equity formula
Return on equity formula
Net profit ÷ Total equity
Min. acceptable return on equity
Min. acceptable return on equity
10% (better than low-risk alternatives)
Accounts receivable turnover formula
Accounts receivable turnover formula
Sales ÷ Accounts receivable