ANALYSIS OF FINANCIAL STATEMENTS

LEARNING OUTCOMES: INTRODUCTION THE PROFITABILITY RATIO:  RETURN ON CAPITAL EMPLOYED (ROI)                         OR  RETURN ON CAPITAL EMPLOYED (ROE) FORMULA OF THE RATIO THE APPLICATION OF THE RATIO ITEMS OF THE NUMERATOR AND DENOMINATOR OF THE RATIO  Return on investment (ROI)                      Or  Return on capital employed (ROCE)  (HEAR TO MY AUDIO CLIP BELOW BY CLICKING ON THE LINK)                                                       ↓       RETURN ON INVESTMENT OR RETURN ON CAPITAL EMPLOYED It explains the overall utilisation of funds by a business enterprise.  It is calculated as = Net profit before interest and tax divided by ...

LEARNING OUTCOMES: INTRODUCTION MEANING AND SIGNIFICANCE OF THE PROFITABILITY RATIOS TYPES OF THE PROFITABILITY RATIOS: 1.OPERATING  RATO 2.GROSS PROFIT RATIO FORMULA OF THE RATIOS THE APPLICATION OF THE RATIOS ITEMS OF THE NUMERATOR AND DENOMINATOR OF THE RATIO 1. Operating ratio It is computed to analyse cost of operations (for operating costs) in relation to revenue from operations. Operating costs = cost of revenue from operations + operating expenses * operating ratio = cost of revenue from operations + operating expenses divided by net revenue from operations × 100 * where,  operating expenses = office expenses + administrative expenses +selling expenses + distributive expenses + depreciation + amortization expenses + employee benefit expenses Significance.. Lower operating ratio is a very healthy sign because it would mean higher operating profit ratio. this is because  Operating ratio = 100 - Operating profit ratio. Ques 1...

LEARNING OUTCOMES: INTRODUCTION MEANING AND SIGNIFICANCE OF THE PROFITABILITY RATIOS TYPES OF THE PROFITABILITY RATIOS: 1.GROSS PROFIT RATIO 2.OPERATING PROFIT RATIO: FORMULA OF THE RATIOS THE APPLICATION OF THE RATIOS ITEMS OF THE NUMERATOR AND DENOMINATOR OF THE RATIO INTRODUCTION AND GROSS PROFIT RATIO        (HEAR THE AUDIO CLIP) Profitability ratios   The profitability or financial performance is mainly summarised in the statement of profit and loss.  Profitability ratios are calculated to analyse the earning capacity of the business which is the outcome of utilisation of resources employed in the business.  There is a close relationship between the profit and efficiency with which the resources employed in the business are utilised. The various ratios which are commonly used to analyse the profitability of the business are: 1.Gross profit ratio 2. Operating profit ratio 3. Operating ratio 4. Net profit ratio 5....

LEARNING OUTCOMES: INTRODUCTION STUDENTS WILL BE ABLE TO: COMPUTE, SOLVE AND CALCULATE TRADE RECEIVABLES TURNOVER RATIO TRADE PAYABLES TURNOVER RATIO WORKING CAPITAL TURNOVER RATIO (HEAR THE INSTRUCTIONS BEFORE YOU START)           ⬇️   INTRODUCTION    TASK  ASSIGNMENT# 9 QUESTION 1 WITH INSTRUCTIONS    HEAR THE AUDIO Calculate Trade receivables turnover ratio.. Revenue from operations             500000 Cash Revenue from operations = 331/3% of credit revenue from operations Additional information:                                                     31 3 2020     ...

LEARNING OUTCOMES: STUDENTS WILL BE ABLE TO: CALCULATE,  SOLVE,  COMPUTE: WORKING CAPITAL TURNOVER RATIO  USING VARIOUS  FORMULAS  AND KNOWING ITS SIGNIFICANCE INTRODUCTION TO THE CLASS   (RECAPITULATION FROM THE PREVIOUS CLASS) TRADE RECEIVABLES TURNOVER RATIO  (HEAR MY AUDIO FOR EXPLANATION)  Trade Receivables Turnover Ratio   It expresses the relationship between net credit revenue from operations and average trade receivables. it is calculated as follows: = Net credit reve nue from operations divided by Average trade receivables where, Average trade receivables = opening trade receivables + closing trade receivables divided by two Significance.. the liquidity position of a firm depends upon the speed with which trade receivables are realised. This ratio indicates the number of times the receivables are converted into cash in an accounting period. This ratio also helps in working out the average colle...