Formulas

• Gross profit margin:

  Gross profit

  ——————— x 100 = %

  Sales
• Profit in relation to revenue

  Profit

  ——— x 100 = %

  Sales
• Return on Capital Employed (ROCE)

  Profit

  —————————— x 100 = %

  Capital employed
• Expenses in relation to revenue

  Expenses

  —————— x 100 = %

  Sales
• Gross Profit Mark-up

  Gross profit

  ———————— x 100 = %

  Cost of Sales
• Current Ratio

  Current assets

  —————————— : 1

  Current liabilities
• Liquid ratio / acid test

  Current assets - inventory

  ——————————————— : 1

  Current liabilities
• Inventory Turnover

  Cost of sales

  —————————— = number of times per year

  Average inventory
• Average inventory

  opening inventory + closing inventory

  —————————————————————

  2
• Trade receivable collection period

  Trade Receivables

  —————————— x 365 = number of days

  credit sales
• Trade payable payment period

  Trade payables

  —————————— x 365 = Number of days

  Credit purchases