Ratio Analysis

The current ratio (and the acid test ratio) are used to assess : L....................... (one word)

Gross Profit Margin and Return on Investment are used to measure what?

What does the Net Profit Ratio show us?

• How much money the business has spent

• How much money the business owes

• The percentage of profit in each sale

• The percentage of assets in each account

Gross profit margin = ..........%

What information do you need for the Current Ratio?

• Current Assets

• Current Liabilities

• Total Assets

• Total Liabilities

If a firm has $7,589 in cash and $17,833 worth of stock on hand, and $14,751 in current liabilities due to suppliers, what is the current ratio?

• 0.51

• 1.21

• 1.74

• 2.25

What formula is used to calculate ROCE?

• Total dividends / capital employed × 100%

• Net profit after interest and tax / total share capital × 100%

• Net profit before interest and tax / capital employed × 100%

• Gross profit / net profit after interest and tax × 100%

Net Profit Margin is an example of a __________ ratio

How can a company improve their Gross Profit Margin?

• Expanding their business

• Changing to a new supplier

• Creating an advertising campaign

• Sourcing cheaper raw materials

Acid Test Ratio is also known as ______ ratio