Ratio Analysis

• Gross Profit Margin

  gross profit/revenue x 100
• Gross Profit Mark-up

  gross profit/cost of sales x 100
• Expenses in relation to Revenue

  expenses/revenue x 100
• Profit in relation to Revenue

  profit before tax/revenue x 100
• Return on Capital Employed : Sole Trader

  profit before interest/capital employed x 100
• Return on Capital Employed : Limited Company

  profit from operations/capital employed x 100
• Capital Employed

  capital + non current liabilities
• Current Ratio (working capital)


  current assets/current liabilities
• Liquid Capital Ratio (acid test)


  current assets - inventory/current liabilities
• Rate of Inventory Turnover : Days

  average inventory/cost of sales x 365
• Rate of Inventory Turnover : Times

  cost of sales/average inventory
• Trade Receivable Days

  trade receivables/credit sales
• Trade Payable Days

  trade payables/credit purchases
• Gearing Ratio (capital structure)


  non current liabilities/equity + non current liabilities x 100
• Interest Cover

  profit from operations/interest payable