Reduce borrowings to target level, minimise interest costs, reduce average debtor days to target, reduce seasonal swings in cashflow, net cash flow as a % of net profit margin
1 of 7
What are the four financial efficency ratio's that a business can use
Creditor days, Debtor days, Asset turnover or stock turnover
2 of 7
State two liquidity ratio's that a business could use to asses itself.
Current Ratio (working capital ratio) and acid test ratio
3 of 7
What ratio should be used to decide whether or not to take out a bank loan?
Gearing ratio (long term liabilities/capital employed)*100
4 of 7
How could a business reduce gearing? (Name two)
focus on profit improvement, replay LTL, retain profits rather than pay dividends, issue more shares, convert loans into equity
5 of 7
How could a business increase gearning? (Name three)
focus on growth, convert short term debt into long term loans, buy back ordinary shares, pay increased dividends out of retained earnings, issue preference shares/debentures
6 of 7
What three calcualtions can be used as part of whether to decide to invest in an appraisal
Payback period, net present value and average rate of return
7 of 7
Other cards in this set
Card 2
Front
What are the four financial efficency ratio's that a business can use
Back
Creditor days, Debtor days, Asset turnover or stock turnover
Card 3
Front
State two liquidity ratio's that a business could use to asses itself.
Back
Card 4
Front
What ratio should be used to decide whether or not to take out a bank loan?
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