DuPont Model, Ratios and Indicators Flashcards Preview

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Flashcards in DuPont Model, Ratios and Indicators Deck (7)
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1

What are the 2 different types of ratios

1. Profitability
2. Liquidity

2

What is the purpose of analysing ratios

They can be used to assess the effect of different strategies as well as analyse a businesses financial reports further

3

Equation for Asset Turnover

Net Sales / Average Total Assets

4

What does the Asset Turnover ratio show

The AT can indicate the quantity of sales that a business earns given its size.

5

Define Asset Turnover

Asset turnover is an reflection of how well the business uses its assets to generate sales revenue

6

Equation for Inventory Turnover

Average inventory / Cost of goods sold x 365

7

What does the Inventory Turnover ratio show

The average number of days it takes before inventory is sold