PEV ratios

Bryony

Hallo everyone

I think I've managed to understand the variances- to me the key to remembering them is understanding them...
But it seems there are quite a few ratios to learn too...some are obvious i.e. operating profit margin, but others aren't.

Any tips on remembering them? Which do you think are important to know?

Thanks all, happy studying!

Bryony

dobbieobby

These are some which I had saved in a spreadsheet:

Break Even Point in Units:
Fixed Costs = Units
selling price - producing price

Margin of Safety:
Fixed costs = Units
selling price - producing price

Budgeted sales - Units x 100 = margin of safety
Budgeted sales

Target Profit:
Fixed Costs + target profit = Units
selling price - producting price

Profit volume ratio:
Selling price - variable costs x 100 = %
Selling price

AK002

Are those above not for ECR rather than PEV?

messedup89

i agree

dobbieobby

Sorry, got a hang over, didnt really read the question :-)

Bryony

got it

Hooray, just found a great document on the e-learning tab that lists almost all the ratios and their meanings,, so I guess I'll just try and learn these.

princess

Bryony wrote: »

Hooray, just found a great document on the e-learning tab that lists almost all the ratios and their meanings,, so I guess I'll just try and learn these.

Hi

Where did you find this???? Struggling big time with them!!!

Thanks

mapry

ratios

hey well i think these might be the ones to grasp as its usually productivity and efficiency ratios but at least read more than these...

ROCE: operating profit/capital employed or net assets (how much more are we gettig from using our assets)
Asset turnover :sales/capital employed (measures how well the assets have been used during a period to generate sales revenue
Debtor days :debtors/sales *365 days (number of days it takes for pple to pay us back
Creditor days :creditors/purchases *365 ('' '' '' '' '' for us to pay the suppliers.

Stock turnover OR Average age of stock : average stock/cost of sales *365

hope this helps