Flashcards: Financial Performance and Market Analysis — 24 cards

Sales Revenue — formula?

Price per unit × quantity sold

Market Share (%) — definition?

Business sales divided by total market sales, times 100

Total Costs — components?

Fixed costs + variable costs

Fixed Costs — example?

Rent, salaries, insurance

Variable Costs — example?

Raw materials, direct labor

Gross Profit — formula?

Sales revenue minus cost of sales

Gross Profit Margin (%) — formula?

(Gross profit / Sales revenue) × 100

Operating Profit — formula?

Gross profit minus operating expenses

Operating Profit Margin (%) — formula?

(Operating profit / Sales revenue) × 100

Net Profit — formula?

Operating profit minus interest and tax

Profit Margin Ratios — purpose?

Assess profitability and efficiency

ROCE (%) — formula?

(Operating profit / Capital employed) × 100

Liquidity Ratios — examples?

Current ratio, acid test ratio

Current Ratio — formula?

Current assets / current liabilities

Acid Test Ratio — formula?

(Current assets – inventories) / current liabilities

Gearing Ratio — formula?

(Non-current liabilities / Capital employed) × 100

Contribution per Unit — formula?

Selling price – variable cost per unit

Breakeven Point — formula?

Fixed costs / contribution per unit

Market Share — significance?

Indicates company's market position

Contribution per Unit — role?

Contributes to covering fixed costs and profit

Gearing Ratio — meaning?

Level of financial leverage and risk

Net Profit — importance?

Final measure of profitability after all expenses

Profit Margin Ratios — compare?

Profitability across periods or companies

Liquidity Ratios — assess?

Short-term solvency and ability to pay debts