Financial Accounting: Reviewing Financial Data

Ratio Analysis

WHY USE RATIO ANALYSIS?

WHO USES RATIO ANALYSIS

MANAGEMENT OPERATION RATIOS

• Return on Capital Employed
• Margin
• Asset Turnover
• Fixed Asset Turnover
• Debtor Days
• Stock Days
• Creditor Days
• Stock/Creditors

CREDITORS RATIOS

• Short Term Liquidity - Current Ratio and Acid Test
• Short Term Risk - Interest Cover
• Long Term Risk - Gearing and How it Effects Return on Capital

INVESTOR RATIOS

• Earnings per Share
• Price/Earnings Ratio
• Dividend Yield
• Dividend Cover

NON-FINANCIAL RATIOS

• Employees
• Operational
• Assets
• Customer
• Supplier

SUMMARY OF RATIOS