Financial Ratios for Revision

Last updated Jun 26, 2023 Edit

• Business

Screenshots are taken from past exam papers.

Find more papers

See the answer snippets here

Payables = Trade Payables / Cost of Sales x 365

Source paper

Receivables = Trade Receivables / Revenue x 365

Source paper

ROCE (%) = Operating Profit / Total Equity + Non-current liabilities x 100

• Bigger is better
• Useful for
  • Benchmarking
  • Overviews

Inventory Turnover = Cost of Sales / Inventories

Current ratio = current assets/ current liabilities

• Determine the risk of running out of cash
• Normally presented as a ratio, but can be shown as a decimal or a fraction

Source paper

Non-current liabilities / total equity + non-current liabilities x 100

• Optimum is between 20-50%
• Below 20% is too low
• Above 50% is too high
• The above is usually correct, there can be exceptions however

For question, see current ratio.

Business