Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

AAT Level 4 Financial Performance > Formulas > Flashcards

Formulas Flashcards

1
Q

ROCE

A

Return on Capital Employed = net profit margin x asset turnover
Or
ROCE = Operating profit / Capital employed x 100(%)

Operating profit: profit before finance costs & tax
Capital employed: Equity & long term debt
Equity = assets - liabilities

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Cost as a % of revenue

A

Cost / Revenue x 100(%)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Asset turnover

A

Revenue / Capital employed

Capital employed: equity + long term loans

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Gross Profit Margin

A

Gross profit / Revenue x 100(%)

Gross profit = Sales - Cost of Sales

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

RONA

A

Return on Net Assets = Operating profit / Net assets x 100(%)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Net Operating Profit Margin

A

Operating profit / Revenue x 100 (%)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Working Capital

A

Current assets - Current liabilities

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Target Profit

A

Total fixed costs + required profit / contribution per unit

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

C/S Ratio

*needs editing

A

c/s ratio = contribution per unit / sales price per unit

c/s: contribution to sales

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Contribution per unit

A

Selling price per unit - variable cost per unit

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Budgeted Profit

A

Total contribution - fixed costs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Breakeven Point (units)

A

Total fixed costs / contribution per unit

The volume of sales at which neither a profit nor a loss is made.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Breakeven Point (sales)

A

Total fixed costs / c/s ratio
Is the £ amount of sales to breakeven

C/S ratio = contribution per unit / sales price per unit

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Current Ratio

A

Current assets / Current liabilities

Liquidity ratio

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Acid Test Ratio (Quick Ratio)

A

Current assets less inventories / Current liabilities

Liquidity ratio

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Inventory Holding Period

Inventory Days

A

Inventories / Cost of sales x 365 days

Shows the number of days on average that a business holds inventory

Liquidity ratio

17
Q

Trade Receivable Days

A

Trade receivables / Revenue x 365 days

A high value shows the company is selling its product to customers on credit and taking longer to collect money.

Liquidity ratio

18
Q

Trade Payable Days

A

Trade payables / Cost of sales (or purchases) x 365 days

Shows how long it takes a company to pay its invoices from trade creditors

Purchases aka bought in materials & services
Cost of sales: opening inventory + purchases - closing inventory

Liquidity ratio

19
Q

Working Capital Cycle

A

Inventory Days + trade receivable days - trade payable days

Measures the time between payment for goods received (inventory) and collection of cash from customers.

Liquidity ratio

20
Q

Value Added

A

Value of revenue - cost of bought in services & materials

21
Q

Profit for the Period Margin

A

Operating profit / sales revenue x 100(%)

Shows % of business’s sales revenue has been turned into profit after all costs and expenses for the period have been deducted but before interest and taxation.

22
Q

Interest Cover

A

Operating profit / interest payable

Is a measure of a business’s ability to pay interest on its borrowings out of the profit that it has made.

23
Q

Sales volume to achieve a particular profit

A

Total fixed costs + required profit / contribution per unit

24
Q

Margin of Safety (units)

A

Budgeted sales units - Breakeven sales units

Is used in breakeven analysis to indicate the amount of sales that are above the breakeven point.

25
Q

Margin of Safety (%)

A

Budgeted sales units - Breakeven sales units / Budgeted sales units x 100(%)

26
Q

Margin of Safety (sales revenue)

A

Margin of Safety in units x sales price per unit

27
Q

Regression Line Equation

A

y = a + bx

a is the fixed element
b is the variable element

28
Q

Index

A

Index = current period figure / base period figure x 100

*base period figure: the price at that time will have an index of 100

29
Q

Current price adjusted figure (index)

A

= actual revenue x RPI in current year / RPI in year of sales

RPI = Retail Price Index

30
Q

Gearing

A

Total debt / total equity x 100

Or

Total debt / total debt + equity x 100

*Total Debt consists of all interest baring debt & does NOT include current liabilities

31
Q

New amount using index

% of increase between amounts

A

Historical price x index of time converting to / index of time converting from

% of increase:
New price - historical price / historical price x 100

AAT Level 4 Financial Performance (2 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions