Unit 7 - Analysing the Strategic Position of a Business

• Current Assets = Inventories + Receivables + Cash and Other Cash Equivalents
• Working Capital or Net Current Assets = Current Assets - Current Liabilities
• Net Assets = Non-Current Assets + Working Capital - Non-Current Liabilities
• Assets Employed = Net Current Assets + Non-Current Assets
• Total Equity = Share Capital + Reserves
• Capital Employed = Total Equity + Non-Current Liabilities
• Gross Profit = Revenue - Cost of Sales
• Operating Profit = Gross Profit - Operating Expenses
• Profit Before Tax = Operating Profit + Finance Income - Finance Costs
• Profit for the Year = Profit Before Tax - Tax
• Earnings per Share = Profit for the Year/Number of Shares Issued
• Gross Profit Margin = Gross Profit/Revenue x 100
• Operating Profit Margin = Operating Profit/Revenue x 100
• Profit for the Year Margin = Profit for the Year/Revenue x 100
• Return on Capital Employed = Operating Profit/(Total Equity + Non-Current Liabilities) x 100
• Current Ratio = Current Assets/Current Liabilities
• Liquid Capital Ratio = (Current Assets - Inventory)/Current Liabilities
• Gearing Ratio = Non-Current Liabilities/(Total Equity + Non-Current Liabilities) x 100
• Payable Days = Payable/Cost of Sales x 365
• Receivable Days = Receivables/Revenue x 365
• Inventory Turnover = Cost of Goods Sold/Average Inventories Held
• Concentration Ratio = Add Up the Market Specific Number of Businesses in that Market
• Payback = Add the Annual Returns from an Investment Until the Cumulative Total Equals the Initial Cost
• ARR = (Total Net Return OR Surplus From a Project / Number of Years)/Initial Cost x 100