Management or Operating Ratios Test This test consists of 10 questions designed to test your understanding of how management performance is measured. The.

Slides:

Advertisements

Similar presentations

RATIO ANALYSIS 3 types Profitability – is the organisation earning more than it spends. Liquidity – is there enough money to cover all bills. Efficiency.

Advertisements

Ratio Analysis Ratio Analysis: A ‘Ratio: is defined as an arithmetical/quantitative/numerical relationship between two numbers. Ratio analysis is a very.

BTEC Level 3 Business Unit 2 Assignment 5 P5, M3, D2.

Business Performance Analysis (Part 2)

Resources for lesson This is a two lesson resource

Ratio Analysis GCSE Business Studies tutor2u™

Session 7 Case studies and Solutions Nursery Management Understanding and Managing Finance.

This test consists of 10 questions designed to test your understanding of the methods of investment appraisal. The links provide you with a choice of answer,

Investment Appraisal Test This test consists of 10 questions designed to test your understanding of the methods of investment appraisal. The links provide.

This test consists of 10 questions designed to test your understanding of the structure of and ability to simply analyse a Balance sheet. The links provide.

Current Ratio Start Card Who has ……. Who Has…I Have… Creditors Days (Average period of credit received) Current Assets Current Liabilities.

Interpretation of Accounts

Understanding & Managing Finance Seminar 7. Seminar Seven - Activities  Preparation: read Chapter 7 (M & A 2 nd Edition) Exercises:  Ratio Activity.

Managing Finance and Budgets Presentation 7 Financial Ratios.

Analysing and interpreting financial statements

Calculating Return on Capital Employed (ROCE)

Ratio Analysis of Accounts. Lesson Objectives for Today: Differentiate between profitability & liquidity ratios. Calculate the main financial Ratios.

Profit and Loss Account Test This test consists of 10 questions designed to test your understanding of Profit and Loss Accounts as well as analysis of.

FINANCIAL STATEMENT ANALYSIS

Accounting Ratios S4 Accounting. RATIO ANALYSIS Ratio analysis is the process of determining and interpreting numerical relationship based on financial.

Ratio Analysis A2 Accounting.

Break Even Test This test consists of 10 questions designed to test your understanding of break even analysis. The links provide you with a choice of answer,

Part 7: Chapter 47 An introduction to the analysis and interpretation of accounting statement By: Nenae 11gs.

Ratio Analysis.

Atrill, McLaney, Harvey, Jenner: Accounting 4e © 2008 Pearson Education Australia ACCOUNTING FOR MANAGEMENT DECISIONS WEEK 7 ANALYSIS AND INTERPRETATIION.

Cheques What is a cheque used for? How would you write the amounts shown in words?

Special Accounting Procedures

Shareholders RatiosTest This test consists of 10 questions designed to test your understanding of those Ratios that shareholders use to judge company performance.

Calculating Gearing.

1 Benefits of Ratios Summary statistic Enable comparison of: one company’s performance over time different companies in same industry sector different.

FINANCIAL PERFORMANCE ACCOUNTING RATIOS. Accounting Ratio Analysis Information contained in financial statements is of major significant to internal and.

Unit 5 An introduction to accounting

5.5.1 Analysing Financial Statements Using Ratio analysis

Learning area 9 Chapter 12 Lecture Profitability ratios page Return on capital employed (ROCE) 7.2 Profit margin 7.3 Asset utilisation ratio.

IB Business and Management

Course Setting up Financial Ratios. What are Financial Ratios? A financial ratio is a relative magnitude of two selected numerical values taken.

 Efficiency ratios evaluate how well a firm’s financial resources are being used. There are four main efficiency ratios: stock turnover, return on capital.

1 Introduction to Ratio Analysis Higher Grade Business Management 2009.

Module Accounting & Finance Topic Ratio Analysis.

HIGHER LEVEL ASSESSING A BUSINESS. Overview Who is interested in the accounts of a business? Profitability ratios Liquidity ratios Activity ratios Dividend.

© Pearson Education 2002 Financial ratio classification Categories Profitability Efficiency Liquidity Gearing Investment.

This test consists of 10 questions designed to test your understanding of liquidity and borrowing ratios. The ratios tested are Current Ratio, Acid Test.

Financial Efficiency Test This test consists of 10 questions designed to test your understanding of financial efficiency ratios The links provide you with.

LO: To know what ratio analysis is and the different methods that can be used.

Ratio (Finance) Presentation By … Rose 11BF. Gross Profit Ratio Gross profit ratio use to see how much does the business get profit of a year.

Special Accounting Procedures Chapter 5. Gross profit Mark-up & Margin Mark-up = Gross profit Cost price Can be either a fraction or a percentage Margin.

Analysis and Interpretation of Accounting Statements Ratios.

Ratios Simple interpretation of financial statements using ratios Gross and net profit, current and acid test ratio, return on capital employed (ROCE).

Reporting on Accounts. Overview Why report on the accounts of a business? Who is interested in the accounts of a business? Types of ratios used.

3.4 Ratio Analysis Aims to judge a firm’s financial performance. Based on assumption that firms want to make a profit.

European Union Test This test consists of 10 questions designed to test your understanding of the EU, the single market and the Euro. The links provide.

T HE I NTERPRETATION OF FINANCIAL STATEMENTS Profitability, liquidity, efficiency, gearing ratios.

Current Ratio Profit (after tax and preference dividends) Number of Issued Ordinary Shares.

Ratio Analysis.

Accounting Page 313.  Why?  To measure the success of a business  To assess performance  To get loans from banks  To plan ahead.

Interpreting accounts The objective of financial statements is to provide information that is useful to a wide range of users in making economic decisions.

 The more you use these ratios and the more you practice using them the easier it will be to remember the calculations, apply them in your exam and.

Ratio Analysis…. Types of ratios…  Performance Ratios: Return on capital employed. (Income Statement and Balance Sheet) Gross profit margin (Income Statement)

Ratio Analysis Business and Management, SL. U56 – Ratio Analysis.

Ratio analysis. Ratio analysis is used to help interpret a firm’s financial data. The five main types of ratios are: Profitability ratios Liquidity ratios.

Cluster 3 Financial Statements and analysis. Net Sales Less Cost of goods Sold = Gross Profit from Sales Less Fixed Operating Expenses Less Depreciation.

Unit 2 Financial & Management Accounting

Investment Appraisal Test

PROFITABILITY RATIOS.

Final Accounts Ms. Zucchero.

Financial ratio classification

RATIO ANALYSIS Dr.S.Kishore Assistant Professor Dept of MBA

RATIO ANALYSIS.

Ratio Analysis - Overview

Interpreting Accounts

Presentation transcript:

Management or Operating Ratios Test This test consists of 10 questions designed to test your understanding of how management performance is measured. The links provide you with a choice of answer, along with explanations and solutions. You will need a calculator to complete this test.

Question 1. A firm has a turnover of £365,000, and a gross profit of £126,000. What is the firms GPM? a. 34.5% b. £239,000 c. 28.9%

Your answer is correct.

Wrong. Your are required to calculate GPM, not Gross Profit. Try Again

The formula is Gross Profittimes100 Turnover 1 Try again.

Question 2. A Firm has a turnover of £2,600,000. Gross Profit of £1,900,000, and expenses of £1,200,000. What is the firms NPM? A. 46.1% B. 36.8% C. 26.9%

Wrong. You must first calculate Net Profit and then apply the NPM formula, which is Net Profittimes100 Turnover 1

Wrong. You must first calculate Net Profit and then apply the NPM formula, which is Net Profittimes100 Turnover 1

Correct.

Question 3. Which of the following are included in ‘Capital Employed’? 1. Short Term Borrowing 2. Shareholders Funds 3. Reserves A. All Three B. 2 and 3 C. 1 and 3

Long term borrowing is included, but short term borrowing is not!

Correct.

Long term borrowing is included, but short term borrowing is not!

Question 4. ROCE measures? A. The effective management of liquidity B. The effective management of current assets C. The effective management of capital

Liquidity ratios are used for this purpose!

Wrong, remember we are looking at capital invested in the business

Correct, well done!

Question 5. Which of the following defines stock turnover? A.The average time taken to pay for stock and raw materials purchased. B. The value average stock held, in relation to total annual sales.

This refers to the creditors ratio. Stock turnover tells us about the relationship between stocks held and turnover.

Correct.

Question 6. A firm has a total capital employed of £900,000, and a trading profit of £110,000. What is the firms ROCE? A. 12.2% B. 122% C. 8.18%

Correct, well done!

The formula to use is Trading Profittimes100 Capital Employed 1

The formula to use is Trading Profittimes100 Capital Employed

Question 7. Which of the following is true? A. A ROCE of less than base rates is desirable. B. A ROCE of more than base rates is desirable.

Wrong. Firms would expect a ROCE of at least 2 or 3% greater than the cost of borrowing.

Correct. Firms would expect a ROCE of at least 2 or 3% greater than the cost of borrowing, but even higher is preferable.

Question 8. Trading profit can be defined as? A. Profit after Interest and Taxation B. Profit before Interest and Taxation C. Turnover less Cost of Sales

Wrong. Trading Profit ignores the effects of Interest and Taxation

Correct, well done!

Wrong. This calculation gives us Gross Profit.

Question 9. A firm has an average stock holding of £116,000, and a Turnover of £596,000. What is the firms Stock Turnover Ratio? A times B. 8.6 times C times

Wrong, The formula is Average stocktimes100 Turnover 1

Wrong, The formula is Average stocktimes100 Turnover 1

Correct.

Question 10. Which of the following firms is likely to have the highest Stock Turnover Ratio? A. Jewelers B. DIY Store C. Greengrocers

Wrong, Likely to have the lowest.

Wrong. Probably in the middle of the 3

Correct. Likely to have a stock turnover ratio of 50 times or even higher.

You have now completed the test. For further more detailed revision please use the case studies on the ALoA web site.