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Topic 22 - Analysis1
Term | Definition |
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Analysis | The process of breaking down something complex into simpler, smaller portions. |
Asset Turnover Ratio | Sales/average assets; used to measure how well assets have been used to generate sales. |
Benchmarks | Tools used to measure performance by comparing financial results against some established criteria. |
Common Size Statements | Reports that use percentages rather than dollar values, to allow easier comparison of results. |
Debt Ratio | Liabilities/total assets; used to measure the dependence of a business on liabilities to fund its assets. |
Expense Ratio | Expense/sales; may also be used for total expenses (total expenses/sales). |
Gearing | The dependence of a business on borrowed funds, compared to funds contributed by the business owner. |
Gross Profit Ratio | Gross profit/sales; shows the percentage of the sales dollar remaining after cost of goods sold has been taken into account. |