Assessment and Interpretation of Accounts
by sarah little
1. Return on capital employed
1.1. Net profit / capital employed
2. Return on shareholders' funds
2.1. Net profit / shareholders' funds
2.2. Shareholders funds = issued share capital + profits (closing p&l reserve)
3. Dividend percentage
3.1. Dividends paid / issued share capital
4. Rate of stock turnover
4.1. Cost of sales / average stock
5. Solvency
5.1. When total assets >= outside liabilities
5.2. Solvent/insolvent
6. Overtrading
6.1. When the daily cash within the company isn't sufficient to finance the quantity of goods the firm's buying or selling.
7. Gross profit margin
7.1. Gross profit / sales * 100
8. Net profit margin
8.1. (Net profit / sales) * 100/1
9. Current ratio
9.1. Current assets : current liabilities
10. Acid test ratio
10.1. (Current assets - closing stock) : current liabilities
11. Report
11.1. Sender's address then date
11.2. Receiver's address
11.3. Introductory paragraph
11.3.1. "Following your instructions..."
11.3.2. Below are my calculations
11.4. Calculations with notes
11.4.1. I.e. " This is a healthy trend"
11.4.2. "Went up by 40%"
11.4.3. "While still good...unhealthy trend"