# PEV - Ratio Analysis

Registered Posts: 80 ๐ซ ๐ฏ ๐ซ
Hello
I am resiting this paper and last time i failed section 2. I was just wondering if anyone had any "idiots" guide to the ratios?? I get stuck with the RONA and ROCE besides all the others!!

Would be really grateful if anyone could help!! (PLEASE)!!

• Registered Posts: 231 ๐ ๐ ๐
RONA=
Profit from operations / Net Assets x 100

ROCE=
Profit from opersations / Capital Employed x 100

The answer is really in the letters, ROCE = Capital Employed (or just Capital)

RONA is on Net Assets.

You only need to remember the Profit from Operations bit really :-)
• Registered Posts: 231 ๐ ๐ ๐
Oh, and in those exams it's 'Net Profit', not 'Profit from Operations'
Sorry, I'm doing DFS, so it's had a name change!
• Registered, Moderator Posts: 2,034
Do you think it would help you if I did a class on ratios (say an hour) and it was broadcast to your computer?
Sandy
[email protected]
www.sandyhood.com
• Registered Posts: 116 ๐ ๐ ๐
I know what you mean about ratios, I am still stuck on a few myself. One I am definitely struggling to understand is the Gearing Ratio, I have searched posts and can see its debt/ debt + equity or debt/ equity from previous threads but I am finding it hard to relate without anything work work by. For example in the PEV June 2007 exam, Q2.1 viii) it asks for gearing.
Is the debt the long-term borrowing figure? And this may seem like a ridiculous question but what part is the equity figure? I have tried to jumble some figures around to see what makes up the answer but I haven't had much success. If anyone could point me in the right direction as to what figures each ones mean it would be appreciated. Thanks.
• Registered Posts: 2,492
Do you think it would help you if I did a class on ratios (say an hour) and it was broadcast to your computer?

Yes!
• Registered Posts: 6,970
Do you think it would help you if I did a class on ratios (say an hour) and it was broadcast to your computer?

• Registered Posts: 231 ๐ ๐ ๐
Me too!
• Registered Posts: 465 Dedicated contributor ๐ ๐ต ๐
• Registered Posts: 138 ๐ ๐ ๐
• Registered, Moderator Posts: 2,034
I am definitely struggling to understand is the Gearing Ratio, I have searched posts and can see its debt/ debt + equity or debt/ equity

Rather than worry about more than one ratio, I recommend (and only teach PEV students) one formula debt/ debt + equity
Is the debt the long-term borrowing figure?
Yes

Not quite answering the: what part is the equity figure? question
[size=+2]But debt + equity is the same as total assets - current liabilities (or fixed assets + net current assets)[/size]

So often PEV papers don't have full balance sheet - instead a list of assets and liabilities
if they do you can find the gearing by calculating

longterm borrowings
total assets less current liabilities
Sandy
[email protected]
www.sandyhood.com
• Registered Posts: 116 ๐ ๐ ๐
Thats great, thanks Sandy! Its not covered in my textbook and just couldn't grasp the specifics of it. Thats much easier to understand I'll work on remembering that now I know which figures to focus on. Thank you
• Registered, Moderator Posts: 2,034
Link if you'd like to attend the webinar

Ratio analysis and the interpretation of performance indicators

Date/time of webinar: 15.00 on Friday 27 November 2009
Presenter: Sandy Hood
Duration: 60 mins

Click through the link to find out how to register.
Sandy
[email protected]
www.sandyhood.com
• Registered Posts: 116 ๐ ๐ ๐
I'm glad I have that day off work for study leave so will be able to be there, I have registered my interest to the email address - thanks.
• Registered Posts: 138 ๐ ๐ ๐
Thank you Sandy - I too have registered
• Registered Posts: 80 ๐ซ ๐ฏ ๐ซ
Thank you Sandy - I too have registered

Thanks Sandy, I have also registered!!