SPM Prinsip Perakaunan Ratio Analysis
Every financial ratio in the SPM Prinsip Perakaunan syllabus (Form 5): the formula, what it measures, a worked calculation from a sample statement, interpretation language for Paper 2 and its limitations.
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Profitability Ratios
Gross Profit % on Cost of Sales (Markup)
Gross Profit ÷ Cost of Sales × 100
Shows the percentage of gross profit added (marked up) on the cost of goods sold. Traders use it as the basis for setting selling prices.
ViewGross Profit Margin (Gross Profit % on Sales)
Gross Profit ÷ Sales × 100
Shows the percentage of each ringgit of sales that remains as gross profit after deducting the cost of sales.
ViewNet Profit Margin (Net Profit % on Sales)
Net Profit ÷ Sales × 100
Shows the percentage of each ringgit of sales that remains as net profit after deducting all expenses.
ViewReturn on Capital (ROC)
Net Profit ÷ Capital × 100
Shows how efficiently the owner’s capital generates profit: the return earned for every RM100 of capital invested.
ViewLiquidity Ratios
Current Ratio
Current Assets ÷ Current Liabilities
Measures the ability of the business to pay its short-term debts using current assets.
ViewAcid-Test Ratio (Quick Ratio)
(Current Assets − Stock) ÷ Current Liabilities
Measures the ability to pay short-term debts without relying on selling stock. It is a stricter test of liquidity.
ViewEfficiency Ratios
Rate of Stock Turnover
Cost of Sales ÷ Average Stock
Shows how many times average stock is sold and replaced in a period. It measures how efficiently stock is managed.
ViewDebtors’ Collection Period
(Debtors ÷ Credit Sales) × 365 days
Shows the average number of days taken to collect debts from debtors (credit customers).
ViewCreditors’ Payment Period
(Creditors ÷ Credit Purchases) × 365 days
Shows the average number of days the business takes to pay creditors (credit suppliers).
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