Accounting Lecture Notes 09

Accounting Lecture Notes 09 - Business performance analysis...

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    Business performance  analysis 1 and 2 Learning objectives Analyse business performance through the use of ratios Advantages and limitations of ratio analysis in interpreting accounting  information Calculate and comment on  Profitability ratios Liquidity ratios Efficiency ratios Next week Investment ratios Financial structure: gearing
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    Activities and Reminders  Read Chapter 6 Atrill and McLaney Moodle: Understand Accounts EQL Cash and Liquidity Profitability Business and Gearing Risks Investor ratio Assessment Quiz 2 7/8 December on Moodle All topics  except week 10 ( Gearing  and investment ratios) Chapters 1-6
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    Interpreting Accounting  Information Difficult to interpret by just looking at  individual numbers/items in acc’s Eg: is £20m profit good? Use ratios (i.e %) allows comparability by  removing issue of scale Interpretation depends on: Relationship among different accounting items External influences Company specific factors Industry specific factors Comparisons
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    Similar businesses during the same period Planned performance Past periods Ratios may be compared with: Ratios benchmarks
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    Financial ratio classification Categories Profitability Efficiency Liquidity Financial gearing Investment
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This note was uploaded on 04/17/2008 for the course MN 1041 taught by Professor Agyemang during the Spring '08 term at Royal Holloway.

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Accounting Lecture Notes 09 - Business performance analysis...

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