Finance - Key Terms 4

What does non-current liabilities mean?

• Short-term debts owed by the business

• Current assets - current liabilities

• Long-term debts owed by the business

• Total assets - total liabilities

What does net current assets (working capital) mean?

• Gross profit/sales revenue x 100

• Current assets - current liabilities

• Total assets - total liabilities

• Operating profit expressed as a percentage of turnover

What does net assets mean?

• Value of all favorable attributes that relate to a company

• Current assets - current liabilities

• Long-term debts owed by the business

• Total assets - total liabilities

What does goodwill mean?

• Value of all favorable attributes that relate to a company

• Operating profit expressed as a percentage of turnover

• Current assets - current liabilities

• Total assets - total liabilities

What does ratio analysis mean?

• Mathematical approach to investigating accounts by comparing two related figures

• Value of all favorable attributes that relate to a company

• Total assets - total liabilities

• Current assets - current liabilities

What does gross profit margin mean?

• Operating profit expressed as a percentage of turnover

• Gross profit/sales revenue x 100

• Total assets - total liabilities

• Current assets - current liabilities

What does operating business margin mean?

• Gross profit/sales revenue x 100

• Operating profit expressed as a percentage of turnover

• Current assets - current liabilities

• Total assets - total liabilities

What does current ratio mean?

• Current assets - current liabilities

• Operating profit expressed as a percentage of turnover

• Current Assets/Current Liabilities, a liquidity ratio

• Total assets - total liabilities

What does acid test ratio mean?

• (Current Assets - Inventory) / Current Liabilities

• Operating profit expressed as a percentage of turnover

• Current assets - current liabilities

• Total assets - total liabilities

What does return on capital employed (ROCE) mean?

• Total assets - total liabilities

• Current assets - current liabilities

• Operating profit expressed as a percentage of turnover

• Net profit / capital employed x 100