Ratios- HELP

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Tina Sparkles
Tina Sparkles Registered Posts: 17 New contributor 🐸
in AAT Level 4 (Level 8 in Scotland)
hI

can someone please explain in simple terms Return on net asstes, asset turnover and capital employed. Any easy way of remembering them i keep forgeting what they mean.

Please help

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  • alicemaylara
    alicemaylara Registered Posts: 259 Dedicated contributor 🦉
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    RONA = Net profit/Net Assets

    I picture it in my mind NP
    NA

    Asset Turnover = Revenue/Capital Employed.

    Capital employed = All assets - current liabilities.


    I dont really have any tips to remember them i just wrote them down about a million times

    I think of it as how well the company is using its assets in relation to its net profit.
  • Gemma Culliss
    Gemma Culliss Registered Posts: 12 New contributor 🐸
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    Ratio(Gearing, Int Cover)

    Has any one got gearing & interest cover ratio??? plz
  • alicemaylara
    alicemaylara Registered Posts: 259 Dedicated contributor 🦉
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    Gearing = Long term liabilities/Capital employed

    Interest cover = Profit before interest/interest
  • joerd84
    joerd84 Registered Posts: 56 Regular contributor ⭐
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    ha, sorry posted that message above in the wrong thread, will try to move it now
  • Gemma Culliss
    Gemma Culliss Registered Posts: 12 New contributor 🐸
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    Roce / rona

    Hi are these both the same/?? Which 1 is Op Prof / Fix, Curr Assetd

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