Ratio Analysis (Leaving Cert Business): Flashcards
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Ratio analysis definition
Ratio analysis definition
Financial tool to evaluate company performance & health
Gross Profit Margin formula
Gross Profit Margin formula
(Gross Profit / Sales) x 100
Net Profit Margin formula
Net Profit Margin formula
(Net Profit / Sales) x 100
Return on Investment formula
Return on Investment formula
(Net Profit / Capital Employed) x 100
Current Ratio formula
Current Ratio formula
Current Assets : Current Liabilities
Acid Test Ratio formula
Acid Test Ratio formula
(Current Assets - Closing Stock) : Current Liabilities
Gearing Ratio formula
Gearing Ratio formula
Total Debt : Total Equity
Good Current Ratio result
Good Current Ratio result
Above 2:1
Good Acid Test Ratio result
Good Acid Test Ratio result
1:1 or higher
Limitation: Historical Data
Limitation: Historical Data
Ratios use past data, may not reflect future performance