Financial measures

Liquidity

* Current Ratio - Represents no. of times company’s short term assets cover its current liabilities, it therefore measures it’s ability to meet its day to day commitments.

* Liquidity Ratio - Represents no. of times a company's quick assets can cover its current liabilities. Quick assets defined as current assets less stock. Allows a reasonable amount of time for stock to be converted into cash.

Gearing

* Total Debt/Net Worth (%) - Measures gearing or leverage of company by comparing total loans (short and long term) to net worth.

* Shareholders Funds/Total Assets (%) - Relationship between company’s assets to shareholders funds.

* Long Term Debt/Net Worth (%) - This represents the debt outstanding beyond 12 months in relation to net worth.

* Interest Cover- Measure of security against debt default, calculated as operating profit divided by net interest payment. The higher the ratio the better, from a credit risk standpoint.

* Total Debt/Working Capital - Gearing measurement which compares total borrowings with the surplus or deficit of funds from normal trading activities.

Employee

* Average Employee Remuneration- Employee remuneration divided by the average number of employees.

* Wages/Sales (%) - Indicates amount of sales revenue expended on employees pay, showing the marginal cost of employment.

* Profit/Employee - Amount of profit before tax made per employee.

Sales/Employee - Often used as a measurement of productivity, indicates amount of sales revenue generated by each employee.

* Capital employed per Employee - Capital employed (sum of shareholders funds and Total Long Term Liabilities) per employee.

* Fixed Assets/Employee - Fixed Asset investment per employee.

* Total Assets/Employee - Total Assets in comparison to the number of employees.

Other

* Creditors/Debtors - Ratio of trade creditors to trade debtors.

Debtors/Total Assets (%) - Measures value of monies owed in relation to company’s asset base.

* Exports/Sales (%) - Amount of sales revenue attributable to export business as a percentage of total sales.

* Sales/Audit Fees - Comparison of sales revenue to cost of audit.

Total Assets/Audit Fees - Comparison of total assets to audit fees.

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