interpretations of accounts formulas

• ROCE 


  (net profit + debenture interest) : capital employed x 100 = %
• ROSF 


  (net profit - preference dividend x) : (profit and loss balance + issue shares) x 100 = %
• Dividend paid


  preference dividend= x and ordinary dividend=y
• DPS


  ordinary dividend y : issues shares = cent
• Dividend yield

  DPS : market value x 100 = %
• Dividend cover


  (net profit - preference dividend x) : ordinary dividend y = times
• Price dividend ratio


  market price : DPS = years
• Current ratio


  current assets : current liabilities ---> ideal 2:1
• Quick / Acid test ratio


  (current assets - closing stock) : current liabilities ----> ideal 1:1
• Gearing


  (debenture - preference shares) : capital employed x 100 = %
• Interest cover

  (net profit + interest) : interest = times
• market value

  EPS x earning ratio price = cent
• Earning ratio price

  market value : EPS = years
• Credit given to Debtors


  debtors : credit sales x 12 = months
• Credit purchase


  creditors : 2 x 12
• cash purchase

  total purchases - credit purchases
• Total purchases


  cost of sales + closing stock - opening stock
• Credit given to Creditors

  creditors : credit purchase x 12 = months
• Stock turnover


  cost of goods sold : average stock = times
• Average stock


  (closing stock + opening stock) : 2