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working capital cycle in a manufacturing businessaverage time raw materials are in stock raw materialspurchases x 365 days plus time taken
working capital cycle for a tradeinventories days time inventories are held before being sold plus trade receivables days how long the
working capital cycle operatingtradingcash cycleit is the time between paying for goods supplied and final receipt of cash from their sale it is
what is inventory turnoverthe shortcoming of this ratio is that average calculation based on beginning and year-end inventory may not represent
inventory daysaverage inventorycost of sales x 365daysaverage inventory can be arrived by taking this years and last years inventory values and
determine the limitations of trade receivable days ratio year-end trade receivables may not be representative of the year credit sales are vat
explain the term- trade receivable days turnoveryearend trade receivablescredit sales or turnover x 365daysit is the average length of time
what are the limitations oftrade payable days ratio year-end trade payables may not be representative of the yearcredit purchases are vat exclusive
what is the trade payable days turnoveryear-end trade payablescredit purchases or cost of salesx 365daysthis is the length of time taken to
state about the quick ratio or acid testquick ratio current assets less inventories current liabilitiestimesthis ratio measures
determine current ratio or working capital ratioca current assetscurrent liabilities timescurrent ratio measures the short term solvency or
wha is asset turnover- performance ratiosasset turnover turnover total assets or capital employedthis demonstrates how much sales are generated for
determine the name of some profit margin ratiosother profit margin ratios can also be computed gross profit turnover profit after tax turnover
operating profit marginoperating profit margin pbit turnover x 100this is the ratio of operating profit to turnover or sales a
what is performance ratiosrocereturn oncapital employed roce profit before interest and tax pbit capital employed 100roce measures profitability
exam technique for analysing performancethe below steps must be adopted when answering a question on analysing performancestep 1 review
in how many area ratios are groupedratios can be grouped into 3 main areas1 performance - how well business has done profitability2 position - short
what is the ratio usesto compare results over a period of timeto measure performance against other organisationsto compare results with a targetto
determine the types of usersinvestors -look at the risk of their investment future growth and profitabilitymanagers employees-have access to more
analysing performance through ratiosratios are an effective way of analysing financial statements a ratio is 2 figures compared to each other and can
financial analysisthe purpose of financial statements is to provide information to all the users of these accounts to assist them in their
q working capital mini qsduring january 20x4 gazza ltd made credit sales of pound30000 that have a 25 mark up it also purchased pound20000 of
q example on controlling working capitaldescribe how a manufacturing company could control its working capital levels and impact of the suggested
the following are extracts of the income statement and balance sheet for umar plcextract balance sheet at 30 june20x2
if current ratio for a company is equal to its acid test that is quick ratio thena the current ratio must be less than oneb working capital is