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assessing business
assessing the business
Question | Answer |
---|---|
who is interested in the information | shareholders: profit that is being made lenders: can loans be paid back creditors: good record of paying back debts revenue commissioners: pay a fair share of tax |
limitations of the final accounts | future changes in fashion changes in exchange rates industrial relations problems figures for fixed assets may be wrong important members may leave the firm |
analysing the business | profitability: how much money is the firm making liquidity: can debts be paid back solvency: are assets worth more than liabilities dividend policy: how much is being paid to shareholders |
gross profit percentage | gross profit 100 _________ x ___ (%) sales 1 |
net profit percentage | net profit 100 _______ x ___ (%) sales 1 |
return on capital employed | net profit 100 ______________ x ___ (%) capital employed 1 |
return on share capital | net profit 100 _________________ x ___ (%)period of credit received for issued share capital 1 |
working capital ratio | current assets:current liabilities |
acid test ratio | current assets-closing stock:current liabilities |
period of credit given to debtors | debtors 100 _________ x ___ (days) credit sales 1 |
period of credit received from creditors | creditors 100 _____________ x ___ credit purchases 1 |
overtrading | assets<liabilities |
turnover | sales - sales reutrns |