Across
- 3. Shows the average number of days a business takes to sell its stock. calculated by dividing inventory by cost of sales multiplied by 365. Lower days suggests efficient stock turnover, while higher days can indicate overstocking or slower-moving goods.
- 6. Measures how much profit a company makes from its operations as a percentage of revenue. Calculated by dividing revenue by cost of sales multiplied by 100. higher margins show better cost control and efficiency in core business activities.
Down
- 1. Assesses the proportion of a company's finance that comes from long-term debt compared to equity. A high number of this ratio suggests more reliance and higher financial risk, while a low number suggests a safer, equity-based financing with potentially lower returns but overall more stability.
- 2. Measures how easily a business can pay interest on its debts using operating profit. Calculated by dividing operating profit by interest. A higher figure suggests lower financial risk and trouble, while a low ratio suggests potential difficulty to meet interest obligations.
- 4. Represents the average time a business takes to pay its suppliers. Calculated by dividing trade payables by cost of sales, multiplied by 365; longer periods suggest improved cash flows but risk damaging supplier relations or missing early payment discounts.
- 5. Indicates a firms ability to meet short-term liabilities using its current assets. Calculated by dividing current assets by current liabilities. A ratio above one suggests liquidity, however too high may indicate insufficient use of resources or excess idle assets.