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Ratios - Coggle Diagram
Ratios
Profitability Ratios
Gross Profit Margin
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the higher the GPM, the better
investors - lower dividend recieved employees - concern of job security managers - analyse business's
performance
Net Profit Margin
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higher the GPM, the better
investors - less profits to pay out dividends employees - concern of job security managers - analyse business performance
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Liquidity Ratios
Current Ratio
Current Assets ; cash on hand, cash in bank, debtors, closing stock
Creditors falling due within 1 year ; trade creditors, bank overdraft
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Acid Test Racio
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However, does not include closing stock > do not rely on selling stock
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Gearing Ratios
Debt : Equity Ratio
compares proportion of capital made up of long-term loans (debt) with proportion of capital that is made up from retained earnings etc (equity)
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