Finance review

Which of the following is NOT a ratio for analyzing the performance (profit) of a business?

• Acid test ratio

• Profit margin

• Gross profit margin

• Return on capital employed

If a business wanted to check they were able to pay the monthly bills (liabilities) what ratio could they use?

• Profit margin

• Return on capital employed

• Current ratio

• Gross profit margin

a business has revenue of 180,000, cost of goods sold is 70,000, what is the gross profit?

• 220,000

• 110,000

• 2m

• -110,000

A factory owner is looking to improve the gross profit margin, what would you advise?

• Lower the selling price

• Find cheaper raw materials

• Find a cheaper factory to rent

• Sack a few managers

The formula for calculating the (net) profit margin is?

• Selling price x output

• Revenue / profit x 100

• Gross profit / revenue x 100

• Net profit / revenue x 100

Ratio analysis is only useful if a business can compare to previous years or a similar business

• True

• False

Which ratio is most important to a potential investor / shareholder?

• Gross profit margin

• Return on capital employed

• Current ratio

• Acid test ratio

one way to improve a businesses profit margin?

• hire more staff

• Increase prices

• Pay more tax

• Get advise from Y10 students

profit is 37,000 and revenue is 84,000. What is the profit margin?

• 47,000

• 121,000

• 20%

• 44%

Which of the following is NOT a current asset?

• Land

• Cash

• Trade receivables

• inventories