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FINANCIAL RATIOS

FINANCIAL RATIOS. USED TO MEASURE PERFORMANCE OF BUSINESS TO INDUSTRY OR ESTABLISHED RESULT – IT IS IRRELEVANT IF ANALYSED ON IT’S OWN – OBJECTIVE LOOK – ENVIRONMENT, CLIMATE, ECONOMY ETC. USED BY CREDITORS, OWNERS, STOCK HOLDERS, MANAGEMENT – TRICKS TO MAKE RATIOS LOOK GOOD. RATIOS.

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FINANCIAL RATIOS

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  1. FINANCIAL RATIOS USED TO MEASURE PERFORMANCE OF BUSINESS TO INDUSTRY OR ESTABLISHED RESULT – IT IS IRRELEVANT IF ANALYSED ON IT’S OWN – OBJECTIVE LOOK – ENVIRONMENT, CLIMATE, ECONOMY ETC USED BY CREDITORS, OWNERS, STOCK HOLDERS, MANAGEMENT – TRICKS TO MAKE RATIOS LOOK GOOD

  2. RATIOS • CURRENT RATIO: RATIO BETWEEN CURRENT ASSETS Vs CURRENT LIABILITIES – 2:1 • ACID TEST RATIO: CASH+CR CARD RECEIVABLES+A/C RECEIVABLES/TOTAL CURRENT LIABILITIES – HIGHER BETTER – CLOSER TO 1 • CREDIT CARD RECEIVABLES RATIO: AVRG CR CARD RECEIVABLES/TOTAL CREDIT REVENUE • CREDIT CARD RECEIVABLES RATIO: AVRG CR CARD RECEIVABLES/TOTAL SALES REVENUE • ACC RECEIVABLE RATIO: AVG ACC REC/ACC REC CR REVENUE

  3. RATIOS • PROFITABILITY RATIOS : 1. RETURN ON ASSETS: NET INCOME/TOT AVE ASSETS 2. NET INCOME TO REVENUE: NET INCOME/SALES REVENUE 3. EARNINGS PER SHARE: NET INCOME/AVE NUMBER SHARES( (SHARES JAN +SHARES DEC)/2)

  4. RATIOS TURNOVER RATIOS: • INVENTORY TURNOVER – COST OF SALES PRD/AVE INVENTORY PRD • WORKING CAPITAL TURNOVER – TOTAL SALES REV/AVE WORKING CAPITAL

  5. RATIOS OPERATING RATIOS • LABOUR COST % • FOOD & BEV COST % • AVE CHECK • REVPASH • AVE RATE • REV PAR

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