🏷️ LIMITED TIME OFFER: GET 20% OFF GRADE+ YEARLY SUBSCRIPTION →
Log in
HomeStudy Guides420,000AU10,000

BU1002 Study Guide - Final Guide: Asset, Asset Turnover, Profit Margin

137 views2 pages
yellowpug748
15 May 2018
School
James Cook University
Department
BU
Course
BU1002
Professor
Dale Wadeson

For unlimited access to Study Guides, a Grade+ subscription is required.

BU1002/BU1902 – Accounting for Decision Making Ratio Formulas
Profitability analysis:
Return on Equity (ROE) = Profit available to Owners x 100 = x%
Average Equity
Return on Assets (ROA) = Earnings before interest & tax (EBIT) x 100 = x%
Average total Assets
Profit margin ratios
Gross Profit Margin = Gross Profit x 100 = x%
Sales Revenue
Profit Margin = Net Profit (Loss) x 100 = x%
Sales Revenue
Cash Flow to Sales Ratio = Cash Flow from Operating Activities x 100 = x%
Sales Revenue
Asset Efficiency Analysis:
Asset turnover ratio = Sales Revenue = x times
Average Total Assets
Days Inventory = Average inventory x 365 = x days
Cost of Sales
Days Debtors = Average Trade Debtors x 365 days = x days
Sales Revenue
Times Inventory Turnover = Cost of Sales = x times
Average Inventory
Times Debtors Turnover = Sales Revenue = x times
Average Trade Debtors
Liquidity Analysis:
Current Ratio = Current Assets = x times
Current Liabilities
Quick (Asset) Ratio = Current Assets – inventory = x times
Current Liabilities
Cash Flow ratio (Liquidity) = Net Cash Flows from Operating Activities = x times
Current Liabilities
1
Unlock document

This preview shows half of the first page of the document.
Unlock all 2 pages and 3 million more documents.

Already have an account? Log in

Get access

Grade+20% off
$8 USD/m$10 USD/m
Billed $96 USD annually
Grade+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
40 Verified Answers

Related Questions

Please help me solve these equations. Please show your work so that I can learn.

Gross profit margin = 70% Inventory turnover ratio = 5 times Sales = $4,000 Net profit margin = 5% Average collection period = 45 days Return on equity = 50% Return on assets = 20% Cash = $75 Current ratio = 2.50 times Accounts payable days = 30 days

Note: Of total sales, 80 percent are on credit and the remainder are cash sales. Assume a 360-day year.

Cash __________ Notes payable __________
Accounts receivable __________ Accounts payable __________
Inventory __________ Long-term debt __________
Net fixed assets __________ Equity __________
Total assets __________ Total liab. & equity __________

Calculate and discuss the importance of the following ratios:

Liquidity Ratios—working capital, current ratio, quick/acid-test ratio, receivable turnover, average day's sales uncollected, inventory turnover, average day's inventory on hand, operating cycle

Profitability Ratios—profit margin, asset turnover, return on assets, debt-to-equity ratio, return on equity

Long-term Solvency Ratios—debt-to-equity ratio, debt to total assets, times interest earned, cash debt coverage

Cash Flow Ratios—cash flow yield, cash flows to sales, cash flows to assets, free cash flow

Market Strength Ratios—Earnings per share, price-earnings per share, payout ratio, book value per share

Using the 10K https://www.chevron.com/-/media/chevron/annual-report/2016/2016-Annual-Report.pdf

Find the following ratios for Chevron for 2015

Current Ratio

Current Ratio = Current Assets / Current Liabilities

Quick Ratio

Quick ratio = (current assets – inventories) / current liabilities

Return on Equity

Return on Equity = Net Income/Shareholder's Equity

Debt-to-Equity Ratio

Debt - Equity Ratio = Total Liabilities / Shareholders' Equity

Inventory Turnover

Inventory Turnover= Sales/ Average Inventory

Earning per share

Earning per share= (Net Income -Dividends on Preferred Stocks)/ Average Outstanding Shares

Gross Margin

Gross Margin= (Revenue-Cost of Goods Sold)/Revenue

Price earning Ratio

Price earning Ratio= Market Value per Share / Earnings per Share

Return on Assets

Return on Assets= Net Income/Total Assets

Times Interest Earned

Times Interest Earned= EBIT/Total interest payable on bonds and other contractual debt.