PEV ratios

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Bryony
Bryony Registered Posts: 15 New contributor 🐸
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

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  • dobbieobby
    dobbieobby Registered Posts: 231 Dedicated contributor 🦉
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    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
    AK002 Registered Posts: 2,492 Beyond epic contributor 🧙‍♂️
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    Are those above not for ECR rather than PEV?
  • messedup89
    messedup89 Registered Posts: 1,281 Beyond epic contributor 🧙‍♂️
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    i agree
  • dobbieobby
    dobbieobby Registered Posts: 231 Dedicated contributor 🦉
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    Sorry, got a hang over, didnt really read the question :-)
  • Bryony
    Bryony Registered Posts: 15 New contributor 🐸
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    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
    princess Registered Posts: 80 Regular contributor ⭐
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    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
    mapry Registered Posts: 15 New contributor 🐸
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    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
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