NCEA 2Acc - Ratios and Percentages

These show how profitable a entity is.

• Gross profit percentage
• Measures of Profitability
• Inventory turnover
• Rate of return on total assets (ROA) percentage

This is the extra a company adds to the cost of a product to determine its selling price.

• Measures of Liquidity
• Mark-up percentage
• Net profit percentage
• Age of accounts receivable

This shows how much profit a company makes after subtracting the cost of goods sold from its revenue, as a proportion of sales.

• Gross profit percentage
• Measures of Management Effectiveness
• Liquid ratio
• Measures of Liquidity

These break down different types of expenses as a percentage of sales. For example, how much of each dollar earned is spent on wages, rent, or advertising.

• Measures of Liquidity
• Expense percentages
• Mark-up percentage
• Rate of return on total assets (ROA) percentage

Expressed as a percentage, the net profit margin shows how much of each dollar collected by a company as revenue translates into Net profit.

• Return on equity (ROE) percentage
• Expense percentages
• Net profit percentage
• Measures of Management Effectiveness

This measures how much profit a company generates with the funds invested by owners. A higher ROE is generally better.

• Mark-up percentage
• Equity ratio
• Measures of Liquidity
• Return on equity (ROE) percentage

This measures how efficiently a company uses its assets to generate profit.

• Inventory turnover
• Mark-up percentage
• Rate of return on total assets (ROA) percentage
• Current ratio

These show how easily a company can convert its assets into cash to pay its debts.

• Rate of return on total assets (ROA) percentage
• Inventory turnover
• Measures of Liquidity
• Measures of Management Effectiveness

This compares a company's current assets (cash, inventory, accounts receivable) to its current liabilities (short-term debts). A higher ratio means the company is better able to pay its short-term debts.

• Liquid ratio
• Current ratio
• Equity ratio
• Measures of Financial Stability

This is a stricter test of liquidity, focusing on the most shirt-term assets (cash and cash equivalents) compared to current liabilities.

• Measures of Liquidity
• Liquid ratio
• Mark-up percentage
• Return on equity (ROE) percentage