Economist Style Guide - Redress Information & Analysis

for stock to be turned over once = (52/number of times) weeks. A low
turnover of stock can be a sign of stocks that are diffi cult to move, and
usually indicates adverse conditions.
Turnover of debtors = sales/average debtors. This indicates effi ciency
in collecting accounts. An average credit period of about one month
is usual, but varies according to credit stringency conditions in the
economy.
Turnover of creditors = purchases/average creditors. Average payment
period is best maintained in line with turnover of debtors.
Sales
Export ratio = exports as a percentage of sales.
Sales per employee = sales/average number of employees.
Assets
Ratios of assets can vary according to the measure of assets used:
Total assets = current assets + fi xed assets + other assets, where fi xed
assets = property + plant and machinery + motor vehicles, etc, and
other assets = long-term investment + goodwill, etc.
Net assets (“net worth”) = total assets – total liabilities = share capital +
reserves
Turnover of net assets = sales/average net assets. As for turnover of
working capital, a low ratio can mean poor use of resources.
Assets per employee = assets/average number of employees. This
indicates the amount of investment backing for employees.
Profits
Profi t margin = (profi t/sales) × 100 = profi ts as a percentage of sales;
usually profi ts before tax.
Profi tability = (profi t/total assets) × 100 = profi ts as a percentage of
total assets.
Return on capital = (profi t/net assets) × 100 = profi ts as a percentage of
net assets (“net worth” or “capital employed”).
Profi t per employee = profi t/average number of employees.
business ratios
Earnings per share (eps) = after-tax profi t – minorities/average number
of shares in issue.
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