8 short tips

1.liquidity:the ability to convert an asset into cash without loss or delay.

2.Gearing: focuses on long-term liquidity and shows whether a firm`s capital structure is likely to be able to continue to meet interest payment and to repay,long- term borrowing

EQUITY:funds provided to set up the business,fund expansion and purchase fixed assets



3.DEBTORS COLLECTION PERIOD=debtors/sales *365

4.creditors payment period =creditors/purchase*365

5.average stock:is the average amount of stock stores in the warehouse

stock turn:it is the cycle of the stock by a period of time


6.ROCE(return on capital employed:is a measure of the value of the profit over resources used by business

return on capital employed:operating profit/capital employed

7.GP (gross profit):the revenue minus costs of sales.The gross profits shows how efficiently a business is converting its raw materials or stock into finished products.

8.NP(net profit): net profit is calculated by subtracting a company's total expenses from total revenue thus showing what the company has earned (or lost) in a given period of time (usually one year). also called net income or net earnings.