Accounts and finance

Table of Contents

1. Topic pack - Accounts and finance - introduction
2. 3.1 Sources of finance - notes
3. 3.1 Sources of finance - questions
4. 3.2 Investment appraisal - notes
5. Investment appraisal
6. 3.2 Investment appraisal - questions
7. 3.3 Working capital - notes
8. 3.3 Working capital - questions
9. 3.4 Budgeting - notes (HL only)
10. 3.4 Budgeting - questions
11. 3.5 Final accounts - notes
12. 3.5 Final accounts - questions
13. 3.5 Final accounts - simulations and activities
14. 3.6 Ratio analysis - notes
15. 3.6 Ratio analysis - questions
16. 3.6 Ratio analysis - simulations and activities
    1. DragIT - Profitability ratios
    2. DragIT - Build the profitability ratios
    3. DragIT - Liquidity ratios
    4. DragIT - Build the liquidity ratios
    5. DragIT - Balance sheet
    6. DragIT - Efficiency ratios
    7. DragIT - Build the financial efficiency ratios
    8. DragIT - Build the shareholder ratios
    9. DragIT - Gearing ratio
    10. DragIT - Build the gearing ratio
    11. DragIT - Ratio analysis
17. Printable version

DragIT - Efficiency ratios

In the image below, try clicking on the arrows beside each variable to see the impact of changes on the efficiency ratios. Once you have done that, you may like to have a go at the questions below.

1

Stock changes - stock turnover When stocks increase the value of the stock turnover ratio will fall. a) True b) False Yes, that's correct. The statement is true. When stocks increase the bottom half of the stock turnover ratio (cost of sales divided by stock) will increase. This will reduce the value of the stock turnover ratio.No, that's not right. The statement is true. When stocks increase the bottom half of the stock turnover ratio (cost of sales divided by stock) will increase. This will reduce the value of the stock turnover ratio.Your answer has been saved.

2

Debtor changes - debtor days ratio When debtors fall the value of the debtor days ratio will fall. a) True b) False Yes, that's correct. The statement is true. When debtors fall the top half of the debtor days ratio (debtors divided by sales revenue x 365) will decrease. This will decrease the value of the debtor days ratio.No, that's not right. The statement is true. When debtors fall the top half of the debtor days ratio (debtors divided by sales revenue x 365) will decrease. This will decrease the value of the debtor days ratio.Your answer has been saved.

3

Current ratio Which of the following is the correct formula for the stock turnover ratio? a) Turnover divided by stock b) Cost of sales divided by stock c) Current assets less stock divided by current liabilities d) Stock divided by cost of sales Please select an answerNo, that's not right. The stock turnover ratio uses cost of sales on the top half of the equation.Yes, that's correct. The stock turnover ratio looks at the rate at which stocks are used.No, that's not right. This is the formula for the acid test ratio and this is a liquidity ratio, not an efficiency ratio.No, that's not right. The variables are right but the formula is the wrong way up..

4

Efficiency ratios Match the formulae with the appropriate ratios. a) Asset turnover ratio Choose... Debtors divided by sales revenue x 365 Sales revenue divided by net assets Cost of sales divided by stock b) Stock turnover ratio Choose... Debtors divided by sales revenue x 365 Sales revenue divided by net assets Cost of sales divided by stock c) Debtor days ratio Choose... Debtors divided by sales revenue x 365 Sales revenue divided by net assets Cost of sales divided by stock Yes, that's correct. Well done.No, that's not quite right. It is important to know these ratios.Your answer has been saved.