RATIONALE AND CONTEMPLATION OF RATIO ANALYSIS
Different accounting methods can result in a wide variety of reported figures. Determine whether ratios were calculated before or after adjustments were made to the balance sheet or income statement, such as non-recurring items and inventory or pro forma adjustments. In many cases, these adjustments can significantly affect the ratios. Carefully examine any departures from industry norms. Ratio Analysis is a useful tool in the following aspects: Evaluation of Liquidity: The ability of a firm to meet its short term payment commitments is called liquidity. Current Ratio and Quick Ratio help to assets the short-term solvency (liquidity) of the firm. Evaluation of Profitability: Profitability ratios i.e. Gross Profit Ratio, Operating Profit Ratio, Net Profit Ratio are basic indicators of the profitability of the firm. In addition, various profitability indicators like Return on Capital Employed (ROCE), Earnings per share (EPS), Return on Assets (ROA) etc. are used to assess the financial performance. Evaluation of Operating Efficiency: Ratios throw light on the degree of efficiency in the management and utilization of assets and resources. These are indicated by activity or performance or turnover ratios e.g. Stock Turnover Ratio, Debtors Turnover Ratio. These indicate the ability of the firm to generate revenue (sales) per rupee of investment in its assets. Evaluation of Financial Strength: Long-term solvency strength is indicated by Capital Structure Ratios like Debt-Equity Ratio, Gearing Ratio, Leverage Ratios etc. These ratios signify the effect of various sources of finance e.g.Pages: 1 [2] 3 4 5 6
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Effective Birthday Invitation Wording TechniquesEffective Birthday Invitation Wording TechniquesAuthor: Trevor MulhollandYou may think it's easy to design a birthday invitation, but when you get down to it, you may find that the wording is the most difficult part. Stumped for words? Read on to find a few tips on how to make your birthday invitation wording more effective and attractive. You should always make it a point to include birthday invitation wording that adequately represents the celebrant. Is the celebrant a humorous person? Or a serious person? Someone who likes poetry? Someone who likes sports? Your invitation should be tailor-made according to the celebrant's preferences. It's not necessary to consult the celebrant on how the invitation should be designed, but your knowledge of the celebrant alone should be enough of a guide. |