Accounting Ratio Formulas

How do you calculate Gross Profit Margin (or percentage)?

• Gross Profit/Cost of Sales x 100

• Gross Profit/Sales x 100

• Revenue/Gross Profit x 100

• Operating Profit/Capital Employed x 100

How do you calculate Return on Capital Employed?

• Operating profit/Share Premium and Non-current Liability x 100

• Profit for the year/Equity and Non-current Liability x 100

• Operating profit/Equity and Non-current Liability x 100

• Operating profit/Share Capital and Non-current Liability x 100

How do you calculate Current Ratio?

• Current Asset - Current Liability: 1

• Current Asset/Current Liability: 1

• Current Asset + Current Liability: 1

• Current Asset - Inventory/ Current Liability: 1

How do you calculate Inventory Turnover Ratio?

• Cost of Sales/Opening inventory

• Average Inventory/Cost of Sales

• Cost of Sales/Average Inventory

• Average Inventory/Cost of Sales x 365

What ratio does this formula calculate "Current Asset minus Inventory divided by Current Liability"?

• Quick Ratio

• Current Ratio

• Inventory Turnover

• Inventory deficiency

What ratio does this formula calculate "Operating Profit divided by Finance costs"?

• Quick Ratio

• Expenses as a percentage of revenue

• Inventory Turnover

• Interest Cover

What ratio does this formula calculate "Non-Current Liabilities divided by Equity and Non-Current Liability"?

• Return on Capital Employed

• Gearing

• Liability Ratio

• Debt to Equity Ratio

Interest Cover is what category of Ratio?

• Gearing

• Profitability

• Liquidity

• Use of resources