Accounting for Managers: Interpreting accounting information for decision-making
CONSTRUCTING FINANCIAL STATEMENTS 77 Managing stock........................................ The main measure of how effectively ...
78 ACCOUNTING FOR MANAGERS A theoretical perspective on financial statements A necessary ingredient for shareholder value (see C ...
CONSTRUCTING FINANCIAL STATEMENTS 79 function of accounting under agency theory is to improve efficiency by minimizing the losse ...
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Part II Using Accounting Information for Decision-Making, Planning and Control Part II shows the reader how accounting informati ...
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7 Interpreting financial statements............................ and Alternative Theoretical Perspectives This chapter introduces ...
84 ACCOUNTING FOR MANAGERS 4 The financial statements: Profit and Loss account, Balance Sheet and Cash Flow statement. The conso ...
INTERPRETING FINANCIAL STATEMENTS 85 Return on capital employed (ROCE) operating profit before interest and tax shareholders’ fu ...
86 ACCOUNTING FOR MANAGERS Table 7.1 Risk and return – effect of different debt/equity mix 100% equity 50% equity 50% debt 10% e ...
INTERPRETING FINANCIAL STATEMENTS 87 This is a measure of how efficiently assets are utilized to generate sales. Investment in a ...
88 ACCOUNTING FOR MANAGERS Interpreting financial information using ratios The interpretation of any ratio depends on the indust ...
INTERPRETING FINANCIAL STATEMENTS 89 Liquidity Improvements in the working capital and acid test ratios are the result of changi ...
90 ACCOUNTING FOR MANAGERS Case study: Ottakar’s – interpreting financial statements Ottakar’s has 74 bookshops and 900 employee ...
INTERPRETING FINANCIAL STATEMENTS 91 Table 7.3 Ottakar’s Balance Sheet in £’000 2001 2000 Fixed assets Intangible assets 793 838 ...
92 ACCOUNTING FOR MANAGERS Table 7.4 Ottakar’s profitability ratios 2001 2000 Return on shareholders’ funds 1,792 463 13,643 12, ...
INTERPRETING FINANCIAL STATEMENTS 93 Table 7.6 Ottakar’s gearing ratios 2001 2000 Gearing 7,920 7,948 21,563 (13, 643 + 7 ,920) ...
94 ACCOUNTING FOR MANAGERS Table 7.9 Ottakar’s five-year summary of performance in £’000 1997 1998 1999 2000 2001 Turnover 23,71 ...
INTERPRETING FINANCIAL STATEMENTS 95 performance and suggested a wider social responsibility for business andsocial accounting.C ...
96 ACCOUNTING FOR MANAGERS Intellectual capital...................................... Edvinsson and Malone (1997) defined intell ...
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