GLOSSARY ENTRY (DERIVED FROM QUESTION BELOW) | ||||||
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07:38 Aug 23, 2002 |
French to English translations [PRO] Bus/Financial - Management / management | |||||||
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| Selected response from: evelyn evans Canada Local time: 18:22 | ||||||
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Summary of answers provided | ||||
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4 +3 | the application of ratios |
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5 | Financial Ratios |
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4 | performance ratios |
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Financial Ratios Explanation: Financial Ratios General Information on Ratios When you pick up the published accounts of a company for the first time, it can be an intimidating experience as you are faced by page after page of numbers. Financial ratios provide you with the tools you need to interpret and understand such accounts. They are essential if you want to look in detail at a company's performance. As the financial reports of a business contain a wealth of financial information, it is important to consider why we are analysing and interpreting the financial reports. The users of financial reports are wide ranging and include a variety of stakeholders: investors, creditors, customers and employees. What do such stakeholders want to know? Is the business profitable? Can the business pay its bills? How is the business financed? How does this year compare to last year? How does our performance compare with our competitors? How does the business compare to the industry norms? There are 3 main categories of ratio: -------------------------------------------------- Note added at 2002-08-23 09:52:52 (GMT) -------------------------------------------------- Financial Ratios Return on Capital Employed (ROCE) ROCE, sometimes called Return on Net Assets, is probably the most popular ratio for measuring general management performance in relation to the capital invested in the business. ROCE defines capital invested in the business as total assets less current liabilities, unlike ROTA, which measures profitability in relation to total assets. ROCE = Net Profit before Interest and Taxes (NPIT) ----------------------------------------------------------------- Total Capital Employed (CE) x 100 = X% Capital Employed may be defined in a variety of ways, the most common being Fixed Assets plus working capital, i.e. Current Assets less Current Liabilities. This definition reflects the investment required to enable a business to function. |
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the application of ratios Explanation: Self explanatory. |
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