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Ratio Analysis

Ratio Analysis. Year 11 Business Studies. Looking at their financial position, what is the best ratio the business should use?. Acid Test Ratio. ROCE. Current ratio. Gross Profit Margin. How is Gross profit ratio calculated?. (Sales revenue/Gross profit)*100. Gross profit/ sales revenue.

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Ratio Analysis

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  1. Ratio Analysis Year 11 Business Studies

  2. Looking at their financial position, what is the best ratio the business should use? Acid Test Ratio ROCE Current ratio Gross Profit Margin

  3. How is Gross profit ratio calculated? (Sales revenue/Gross profit)*100 Gross profit/ sales revenue (Gross profit/ sales revenue)*100 Sales revenue-cost of goods sold

  4. Do you have to minus taxes when calculating Net profit ratio? Yes No Maybe I don't know!

  5. What does ROCE stand for? Raise On Capital Employees Return On Capital Employed Returns on Camels Employed Return On Capital Exploited

  6. How do you calculate ROCE? Gross Profit/ Operating profit Net Profit/ Operating profit (Operating Profit/ Capital Employed)*100 Capital employed/ sales revenue

  7. What is current ratio? Current stocks- current liabilities Current Assets/ Current Liabilities (Operating Profit/ Current Liabilities)*100 Capital employed/ Net Profit ratio

  8. Which of the following would NOT improve the current ratio? Borrow short term to finance additional fixed assets. Issue long-term debt to buy inventory. Sell common stock to reduce current liabilities. Sell fixed assets to reduce accounts payable.

  9. The gross profit margin is unchanged, but the net profit margin declined over the same period. This could have happened if… cost of goods sold increased relative to sales. sales increased relative to expenses. the government increased the tax rate. dividends were decreased.

  10. Are assets listed in order of increasing liquidity on the balance sheet? No Yes May be No idea

  11. Should all companies have at least a 1.5 to 1 current ratio? No Yes

  12. By- Abhishek & Azeez

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