Studied by 0 peopleliquidity
the ability of a business to pay its short-term debts
profit margin
this ratio compares operating profit with revenue
profitability
a relative measure of a business’s ability to make a profit from sales or a capital investment
gross profit margin
this ratio compares gross profit (profit before deduction of overhead expenses) with revenue
gross profit margin %
gross profit/sales revenue * 100
profit margin %
profit before interest and tax/sales revenue * 100
return on capital employed
this compares operating profit and the capital employed in the business
return on capital employed %
profit before interest and tax/capital employed * 100
capital employed
the total value of all long-term finance invested in the business = non-current liabilities + equity
liquidity
ability of a business to pay its short-term debts
current ratio
current assets/current liabilities
current ratio
this compares the current assets with the current liabilities of the business
acid test ratio
this compares the liquid assets of a business with its current liabilities
acid test ratio
current assets - stock/current liabilities
Note
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