Revision Notes for Finance

Ratio! Formula! What it tells us! determines its power to withstand emulation and adverse conditions like rising cost, falling costs or declining glaring revenue in the future - measure of e?ciency of the company. Ac c e p t e d ratio How burn down it be im professionalved As high as -Raising Revenue: subjoin (decrease) selling price for price inelastic (elastic) possible products (salt/pepper) ; market strategies - Reducing cost: reduce direct material be ; direct crunch costs As high as -As above - indirect expenses possible - Negotiate cheaper rent 1.5 to 2.0 At least 1.1 rate of current assets value of current liabilities direct of current assets ( silver/debtor) hit up of current liabilities Profitability Ratio indicates whether the company is in operation(p) above or below the average e?ciency of most other companies in the same manufacture. Reveal whether a ?rm is capable to social function its liquid assets to cover its short-term debts treasure ?rms ability to cover its shorts term debts with its cash and debtors; reduce take of risks exposed by lenders and investors. Measure and oppose the ?nancial performance of ?rm against amount of capital invested (indicator of ?rms pro?tability) (Also cognize as sway-taking turnover) Measures the number of times a company converts its stock into gross sales during the year.

When examining this ratio it should be borne in brain that di?erent companies will watch varying levels of stock turnover depending on what they produce and the industry they operate in. Liquidity Ratio As high as - bring in Pro?t possible of capital employed date ! net pro?t remained constant Depend on reduce roll and join on turnover d i f f e r e n t without purchasing/renting storage spaces: type o f - reduce lead time from vendors and suppliers. business - increase bode accuracy - reduce purchase transaction costs (distributors) and set-up/transition costs (manufacturers). neither too - surcharges on advanced payers (a ?ne) h i g h t n o r -Reuses any further biz...If you want to sterilize a full essay, order it on our website: OrderCustomPaper.com

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