Ratios (AQA A-Level Business): Flashcards
📚Flashcards
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Practise the cards
10 cards from this deck
Current ratio formula
Current ratio formula
Current Assets ÷ Current Liabilities
Ideal current ratio range
Ideal current ratio range
Between 1.5 and 2
ROCE formula
ROCE formula
(Operating Profit ÷ (Total Equity + Non-current Liabilities)) × 100
Inventory turnover formula
Inventory turnover formula
Cost of Sales ÷ Cost of Average Stock Held
Payables days formula
Payables days formula
(Payables ÷ Cost of Sales) × 365
Receivables days formula
Receivables days formula
(Receivables ÷ Sales Revenue) × 365
What does insolvency mean
What does insolvency mean
Lacking enough current assets to pay liabilities when due
What do liquidity ratios reveal
What do liquidity ratios reveal
How much money a business has to pay bills when due
What does ROCE measure
What does ROCE measure
Money made by business compared to money invested in it
Why are low receivables days better
Why are low receivables days better
Helps with cash flow and working capital