UNIT CONTRIBUITION METHOD

1. Contribution(per unit) = Selling price - Variable cost per unit

Total = Sales - Total Variable cost

2. Break even point = Total fixed cost

(units) Contribution per unit

3. Break even point = Break even point - Selling price

($) (units) (per unit)

4. Margin of safety = Sales volume - BEP

(units) (units) (units)

5. Margin of safety = MOS x Selling price

($) (units) (per unit)

6. Margin of safety = Sales revenue - BEP

($) ($)

7. MOS as a % of = MOS (units/$) x 100

revenue Sales (units/$)

8. Units to be sold to = Total fixed cost - Target profit

reach target profit Contribution per unit
 CS Ratio
1. Contribution(per unit) = Selling price - Variable cost per unit
Total = Sales - Total Variable cost

2. CS ratio = Contribution (unit/sales) x 100

Sales(unit/sales)

3. Break even point = Total fixed

($) CS ratio

4. Break even point = BEP in revenue

(units) Selling price

5. MOS = Sales volume - BEP

(units) (units) (units)

6. MOS ($) = MOS (units) x Selling price

7. MOS as a % of = MOS (units/$) x 100

reveune Sales (units/$)
8. Sales revenue to = Total fixed cost + Target profit
reach a target profit CS ratio

Liquidity Ratio

1. Current Ratio = Current Assets

Current Liabilities

2. Acid Test Ratio = Current Assets - Inventory

Current Laibilities

3. Gross Margin = Gross Profit x 100

Sales Revenue

4. Gross Markup = Gross Profit x 100

Cost of Sales

5. Profit Margin = Profit for the year x 100

Revenue

6. ROCE = Net Profit before intrest x 100

Capital Employed
 Capital Employed = Capital + Non current Liability

Capital Employed = Total Assets - Current Liabilities

7. Expense ratio = Particular expense x 100

Net Sales

8. Operating Expenses = Operating Expenses x 100

Net Sales

Efficentcy Ratio

1. Non Current Asset ratio = Net Revenue A high turn over indicates that assets are being utilized efficiently and large amount of sales
Total NBV of the Non Current Assets amount of assets. It could also mean that the company has sold off its equipment

Higher → Better

2. Trade Receivable Turnover = Trade Recievables x 365 Ability to efficiently collect its receivables, if high companies are collecting their receivables
(days) Credit Sales through out the year

Higher → Better

3. Trade Payable Trunover = Trade Payables x 365 How quickly a company pays off its vendors, if the company pays its bills frequently and regu
 (days) Credit Sales
Low → Better

4. Inventory Turnover = Average Inventory x 365 How efficiently a company can control its inventory, if high it shows shows the company doe
(days) Cost of Sales buying too much inventory and wastes resources by storing nonsalable inventory
It also shows that the company can effectively sell the inventory it buys.
This measurement shows how easily a company can turn its inventory into cash.

Higher → Better

5. Rate of Inventory Turnover = Cost of Sales

(times) Average Inventory

A2
1. Working capital Cycle = Trade recivables turnover + Inventory turnover + Trade payable turnover
(days) (days) (days) (days)

Working capital Cycle = Average collection + Inventory turnover + Average payment period
(days) period (days)

Measure the time it takes a company to convert its investment in inventory and other resources into cash.
1. How long will it take for the inventory to be sold
2. How long will it take for the sale to convert to cash
3. How long will it take to pay the TP

= Good
 = Bad

2. Net working Assets to = Net working Assets x 100

Sales Revenue (Sales)

Net working Assets = Inventories + Trade recievables - Trade payables

= Good
= Bad

3. Intrest coverage ratio = Profit from operations (EBIT)

Intrest payable

representation of how much the company can afford to pay in interest.

If the computation is less than 1, it means the company isn’t making enough money to pay its interest.

More than 1 = Good

Less than 1 = Bad

4. Income gearing = Intrest income x 100

Profit from oerations
 The extent a company can pay for its borrowing.

The profit from operation should cover Intrest at least 4 times = Good

5. Gearing ratio = Fixed cost Capital

Total capital

= Non current liabilities + Preference Share capital

Issued ordinary share cpaital + All reserves + Non current liabilities + Prefernce Shares

proportion of a company's borrowed funds to its equity

A high gearing ratio represents a high proportion of debt to equity,
High = Bad
Low = Good

Investment ratios

1. Earning per share = Net profit - Preference share dividend

No of issued Ordinary share

measures the amount of net income earned per share of stock

High = Good
Low = Bad
2. Price Earning ratio = Market price per share
Earnings per share

market's willingness to pay for a stock based on its current earnings.

High = Good
Low = Bad

3. Dividend yeild = Dividend paid and proposed

Market price of share

how much dividends they are getting for every dollar that the stock is worth.

High = Larger dividen given - invetors prefer this more

Low = Lower Dividend given, reinvested

4. Dividend cover = Profit available to pay ordinary dividend

Dividen paid to Ordinary Shareholders

The capacity of an organization to pay dividends out of profit ato shareholders

3 = good
2 = can pay
below 1.5 = Cannot pay due to adverse variances
 Dividend per share = Ordinary dividend paid
No of issued Ordinary Shares
how much dividend an investor is going to get per share

High = Good
Low = Bad
mount of sales are generated using a small

eir receivables more frequently

uently and regularly

e company does not overspend by
-6 -5 -4 -3 -2 -1 0 1 2

4 2 0 -2 -4 6 -8
 Cost
12.5 10.75
18.4 27.6 40 45
9.1 6.65
1.25 1.04
41.25 46.04

49.5 55.25

3 4 5 6 7

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