ACCA AA Syllabus B. Planning And Risk Assessment - Key ratios used in analytical procedures - Notes 5 / 5
Key ratios used in analytical procedures
The financial ratios used by the auditor will fall into 3 general categories:
Profitability/Return
Gross Margin
Net Margin
ROCE
Liquidity/Efficiency
Receivables/Payables/Inventory Days
Current Ratio
Quick Ratio
Gearing
Financial Gearing
Operational Gearing
ROCE
Profit Before Interest and Tax
_______________________________________________________
Total Assets – Current Liabilities (Capital Employed)
ROE
Profit after tax – preference dividends
_______________________________________
Equity shareholders funds
Gross Margin
Gross profit
______________
Revenue
Operating Margin
Profit before interest and tax
________________________________
Revenue
Current Ratio
Current Assets
_________________
Current Liabilities
Quick Ratio
Current Assets – Inventories
_____________________________
Current Liabilities
Inventory Days
Closing (or average) Inventory
__________________________________ x 365
COS
Receivable Days
Trade Receivables
______________________ x 365
Credit Sales
Payable Days
Trade Payables
____________________ x 365
Credit Purchases
Gearing
Debt
______________
Debt + Equity
OR
Debt
_______
Equity
Interest Cover
Profit before Interest and Tax (PBIT)
___________________________________
Interest payable