Download
financial accounting n.
Skip this Video
Loading SlideShow in 5 Seconds..
FINANCIAL ACCOUNTING PowerPoint Presentation
Download Presentation
FINANCIAL ACCOUNTING

FINANCIAL ACCOUNTING

62 Views Download Presentation
Download Presentation

FINANCIAL ACCOUNTING

- - - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript

  1. Buckingham College of London FINANCIAL ACCOUNTING ABE (Diploma in Business Management) • Lecturer : M. M. Ahsan Email : ahsan6960@gmail.com • Session : 01 Week : 08 & 09 • Lecture No : 08 & 09Date : 06/03/2012 & 13/03/2012

  2. Notes ---------------------------------------------------------------- ---------------------------------------------------------------- ---------------------------------------------------------------- ----------------------------------------------------------------

  3. Assessing Financial Performance

  4. Notes ---------------------------------------------------------------- ---------------------------------------------------------------- ---------------------------------------------------------------- ----------------------------------------------------------------

  5. Why Ratio Analysis? • To compare the performance of the business with previous years • To compare the actual performance of the business with the budgeted or planned performance • To compare results with the performance of similar businesses.

  6. Notes ---------------------------------------------------------------- ---------------------------------------------------------------- ---------------------------------------------------------------- ----------------------------------------------------------------

  7. Common Accounting Ratios • Profitability • Efficiency • Liquidity • Capital structure • investment

  8. Notes ---------------------------------------------------------------- ---------------------------------------------------------------- ---------------------------------------------------------------- ----------------------------------------------------------------

  9. Drawbacks and Limitations • Ratios deal mainly in numbers – they don’t address issues like product quality, customer service, employee morale and so on • Ratios largely look at the past, not the future.  However, investment analysts will make assumptions about future performance using ratios • Ratios are most useful when they are used to compare performance over a long period of time or against comparable businesses and an industry – this information is not always available • Financial information can be “massaged” in several ways to make the figures used for ratios more attractive. 

  10. Notes ---------------------------------------------------------------- ---------------------------------------------------------------- ---------------------------------------------------------------- ----------------------------------------------------------------

  11. Issues in interpretation Financial dangers and their detection : • Declining sales • Excessive expenses • Shortage of working capital • Excessive inventories • Slow-paying debtors • Non-current assets needing replacement • Diminishing returns • Over trading

  12. Notes ---------------------------------------------------------------- ---------------------------------------------------------------- ---------------------------------------------------------------- ----------------------------------------------------------------