Unit 3.5 Profitability and liquidity ratio analysis APK

Which of the following is not a financial ratio?

• Staff turnover ratio

• Gross profit margin

• Return on capital employed

What does ROCE stand for?

• Real Operational Capital Employed

• Rate of Capital Expenditure

• Return on Capital Employed

Liquidity ratios are financial ratios that examine an organization’s ability to pay its liabilities and debts.

• True

• False

(a)   analysis is a

quantitative management planning and decision-making tool, used to analyze and evaluate the financial performance of a business. These can be further categorized as profitability, liquidity and efficiency ratio analysis.

Suppose a firm has sales revenue equal to $100 million, the cost of sales or cost of goods sold (COGS) equal $55 million, and expenses (or overheads) equal $25 million. Calculate the net profit margin (NPM) if the formula is:

NPM: (Net profit before interest and tax/sales revenue)100

Draw an image of the term "liquidity"

Net profit margin (NPM) is a profitability ratio that measures a firm’s overall profit (after all costs of production have been deducted) as a percentage of its sales revenue. It is also an indicator of how well a business can manage its indirect costs (overhead expenses).

• False

• True

Will Mrs. Casco gives us a summative review at the end of the unit?

• Yes

• No

• Maybe

Would you like to review Unit 3.4 one last time, conduct a brief general overview?

• Yes

• No