Accounting Business Reporting for Decision Making

CHAPTER 8 Analysis and interpretation of financial statements 327 Step 3: Divide the 2012 revenue by the 2010 revenue, and expre ...

328 Accounting: Business Reporting for Decision Making VALUE TO BUSINESS • To calculate a trend, it is necessary to have at le ...

CHAPTER 8 Analysis and interpretation of financial statements 329 Consolidated Notes 2015 $’000 % relative to total assets Non-c ...

330 Accounting: Business Reporting for Decision Making VALUE TO BUSINESS • Vertical analysis compares items in a financial sta ...

CHAPTER 8 Analysis and interpretation of financial statements 331 confined to listed companies, relating the company’s financial ...

332 Accounting: Business Reporting for Decision Making process may appear to be fairly mechanical, the benefit of ratio analysis ...

CHAPTER 8 Analysis and interpretation of financial statements 333 The ROE indicates the annual return (in cents) that the entity ...

334 Accounting: Business Reporting for Decision Making An entity must meet all other expenses from its gross profit. The compari ...

CHAPTER 8 Analysis and interpretation of financial statements 335 2015 2014 Expense ratios Sales and marketing $374 084 $3 65213 ...

336 Accounting: Business Reporting for Decision Making JB Hi-Fi Ltd converted $1 of sales revenue into 3.69 cents of profit in 2 ...

CHAPTER 8 Analysis and interpretation of financial statements 337 VALUE TO BUSINESS • The return on equity (ROE) calculates th ...

338 Accounting: Business Reporting for Decision Making Days debtors: Average trade debtors ×365 days=x days Sales revenue It is ...

CHAPTER 8 Analysis and interpretation of financial statements 339 ILLUSTRATIVE EXAMPLE 8.1 An entity’s activity cycle Purchase i ...

340 Accounting: Business Reporting for Decision Making When calculating the days debtors, only the gross value of current trade- ...

CHAPTER 8 Analysis and interpretation of financial statements 341 8.6 Liquidity analysis LEARNING OBJECTIVE 8.6 Define, calculat ...

342 Accounting: Business Reporting for Decision Making argued that the cash flow ratio is a better measure of liquidity than the ...

CHAPTER 8 Analysis and interpretation of financial statements 343 8.7 Capital structure analysis LEARNING OBJECTIVE 8.7 Define, ...

344 Accounting: Business Reporting for Decision Making ILLUSTRATIVE EXAMPLE 8.2 Capital structure ratios measuring the use of de ...

CHAPTER 8 Analysis and interpretation of financial statements 345 The interest coverage ratio is inversely related to an entity’ ...

346 Accounting: Business Reporting for Decision Making The cash debt coverage ratio for 2015 indicates that, if JB Hi-Fi Ltd mai ...