J. © Rak 7 aio analysis ASS ae oe Ratio alysis & enalysis fs the prowess of determining ond inteapne th : q numeaai col “gelatons hips besed on final stele i ent. by computhg cnehas. iF es east + under stard che Financial! positon of the firm . Rew? eance ysis es used 4o focus oO finencial issue such OS Ligyuickie pore fj-tebi li FY oma solvent} ooo Be 4 whet fs the getio 2 eal, $3 % simply num bert evpne sed tn fans of another. it meters 7° whe samen coal quanto guerotion shi? bn wo yonial®§ which ome comparable ye fs oN expression aerived vy divid ny one vemiable &4 ye oe? iw 1S statis a thet paovides insighh ae vet” ip bly juno vaaniobles Rens wed gneld weg oven develo? robes oon be ome shmulate, hinting - ondens eanding of proportions expaesed i Aes ome — quohep also.yee ak SS Based on them gatos Con broadly, pate, ahe, be clasified into four coteqories. The numbers OF patios oe their wmedin Ly five retios in Bellow. © Lquidity retin © pono Bitabuslity aotd @ activity yore © swe vpovtin Lo © reeoage roto norket epoca Teh) © Pro RivetoY vat. De quidity ratio= SE Mise e Liquidity ato Mmeasere he to -yepay HS short- 400" coan vecds. Thelin Oe a tyes: oO coarTone oh0 C2) QO wil Liquidity ret cut) © — absue quidity C12) ey super errs ahos. ed Curse? aaho |= we nwo The current rato ts ol called OS. athe x ., . ok ae capital ratio. 3 wonding cop! ts ee difkerent Lin careemt asses cursor Viods WHeS,of a Company te Pty Cnr aris rod mew sured Yre ability obligochons sing current — assedg » The je curren asset bY” jaw ss ccteutatied BY aividing current current Wabi lites caveat asseé currant = RaW = ——________~ cavrent Liabiti¥es sndicares Ye comm eg wrame current mis Fahd fabjliied. asses than current 40s from =a coliculok Lianidity Fe 450000 4,00 , 000 1,001,000 100,000 50,000 Sd000 = 4 éZa _ cavvent SS => current Rad = Current Lebilitgy . carrer seek shock Of Ro ymepaial = 1,SD/000 fivished qooes = 100,000 debtors = 1,00, 000 Bank balance = Sd,0d0 Total = _ $0,000 corr Loki ty Sumd 4 debtyS = 4,00,000 wits pogbude. = $0,000 pi] = 4,50:000 Se . passe carrnt Rate = ong 7 cCorrech Levit 4100 :000 a 1,50, 000 = g.6tihb > Quick Peltid I= wo. assed Bm Hebi tit. ® 1,0 000 puick Rohd = puck asses = current pssere— shock 400,000 — 2, S000 = 1,§0,000 1006 use 2 Mb 1190 000Abs. Liquia mses diel see Hes. Hobili R23 - erolly PY bo nth [bent avatue Liquid Ratio = % Liquid Assers meme gis payble = s0.900 sundry crediter'$= 162,000 ao) = 110,000 bom patience = $P1000 tom #ssets de §,000 “ | 1,SD,;000 = 0.33%h SS a aa propabity — raties oa oS & Prokitaleility aakos Ho light 07 fon well she fir 3s onqonisi«g «HS aes enegeble ramen wey we Tre owness epost ae osonable ste of ety } javushmnent + re | fies should quer enovg" pack x t rok only FP weet HE eupecto tons of oan pt aso finonce Ahe exporn sion ack - eight vohes mag} Commonly everGh) Rekum on Investment Ceot) > retunn on Capital employed. Gi) Rehan on cmt. (5) eamnings Pen Shore cers) @) Dividend yield Ca) pmiee)ecanwings rextid Cpe oH) @) Boawing Power => Gross pobt Ree = (Frasing ale Corress protit)) cross —pnotit wotio |S He ratio bln ep 105s profit awsing om qin peaiod- xr expressed in she, aifzener +o sald esms of — pencendeag® Gras proht 4s bln dhe ner Sal? and the test of = qos HA. Gross profit a of qoodt Sold te colenlaed ello: ssl wet soled = $0/000 goods Sold = 201000 cast of The GN ae Gross. protit= soled — $0,000 — 20/200 ape = Se xmg = 30,000 ; Nook? ee= 30,000 apes ——xI00 £0,000 bo pencent thes 404 o words , 607 of ie sales js tHe ¥ ry profit. an pei tre anges net protits ote” postion of 4 enpnsd ial => nev ptt Rohvi= net eins OO fs the vaho bln eg what atten porohit rest sales. Te indices do the owneas vet ond net eke ok eh pena tin invent ments. sales 1S Now — open Hey ince on op otter toned X00 net protit oti0 = et Sales Problem, ccolag FS $01000 fo suppase Ake net of quo geld TS BS Bop000 THE details oF 3 gives ellow, pa min igtretion eupensey #3 3000 ond ced tcbribuho ev eg 4000 & Loss on Sale? of teed assed Zevd inverter} #3 20D SeMing autunet ow “Tax aotCompurtertion of Net _powhits sh m (ee) sole SD,000 Less cost of goods Sold 20,000 30,000 Gross profit less -administectin e mpenseds 40,00 Sening ond pigtr. enpersess 4-000 wid nee erott 22,000 Add! rnterest on inves Hest 2000 Cron opometing incon) 24 000 Qo 00 Ley, Lass on Sales of assel? a 21,000 Tavs 201), “yn per rroth = 16,800 worpmbt = 8. x Wo 50,000 = 33. bl. * the — righeat athe pootit veo: es the eonfitobilit4 ond Vice - Versa. a wmenseY ot net * fe Un aia Tes not? as wid} yyed \ Ove) poo Feta 4: st should be used colony i Aion. with operat} od do bin wer PNe S$ tng RAN B= = openoting a ° = fy thereto bin costs of goods apenas rech ‘S. lee. i caperses net He BET IS soe ° operating SP sis eup cessed Am poncento pe jo newh ‘ © openating goto, the — auiew profitability hig hey ond Vescr, vice openoting yatin= a ———— sared opening — expensed = cast of yoods cold + Administ rehVE enperses -— —= “L setling aud dishiketion ex= sd mini strortve evpemsess coven ol olice amd rromagemett expensed such salon Ss office vents mnsiuvennce , diver dee. lege! expenses, ond so oO" gelling ome aigtiboi) expense include — sales +o sal4d grat oavertisingy Aone ling, expenses ast ot somapl? oud 50 °K) yet sails = S13 Jens | sees vererns - > In jrtenpreing opeaesing roto, the possiley ity of Variety in expens3 from qe 4 yout ov come} +o compen gue + chenge polices chould be considered. progetabilit CP = (ovo oreeng Ww Soli — otek empen se = 3, 215) 000 depreciotions = AS,000 Sivdreat ewpennd = 25000 net sae = ae pS O00 phe _Sisipo— 95,000 —5,008 oe ee 3 Y- Ee T1S 002 ———crress pmogit — office and ostwint opemating — Profit eatio = eupensel — sellingornd dtvtributtyy * Sales Py sale eetums 1900 cast of sale 3F,00 optice ond #dmin exe FBO 2,250 Saliony ond AiSbibY emp 280 svat on mst pe i; PSTD boss by 4e—\__ srane tom ington Eten aero FD ad : = 2ANDO~ 22503900 ope 2 10 al aS 601000 = tery.% ee => = Retin on invest met (eer) 3= Reta 20 RN one of the VORY jmpontan— itty of the Retunn on investment fs poncametens otfecting wusineds plans. The parti tal) fm fs eased I demms of rete 8% investn ent: pet Profit able Tete3 Rol = otal investment joyerd Croce) a @ Reka on copie! eme — pe —T athe only pearfor mance wis Tso widely used ahide ants ¥S Satisfactory ie asune which grevealS the ovenall of a fine in jenms oF pon Habit Roce = Ctajustes met porokits] capita) employes) Gi) Retonrs On equik Ye aw NTO ore ) pookhs ovcilabl® do eaty sonount ales ghom. Tae Wighey ee the profitability oma denen ce Showehel ais yelales she net ghorrehol dens +o the vice, VemSa athe ROE 1s Ahe wone poe = (Nt pro hts _aiviaends ¥° pre catty Shove capita) with thet of othe decision +0 Swick 2 . e aes atin TS Compared Cam parr S Com lore & tre cavity chaorehol dor othen by sening ove | Comper 40 fhe oer fom Lased on His yotio. dhe Shoarel gor th = oF muemce Bre ae even re you ey aes > see 2 po UeeAre po pret r+ fs he «Brea ve renlys'swe ane odjustet met poohits yehen +o Nosed or Gans ony abnonmnal or pon! YEUNG * depreciation based = OY replacement tot of the cased, * income = from anvegtm ent outside Ae busines. * tenet on long= seo qyoubili 14 ay ee be be adaed Waele we the wer profs consistency )] twee ree [Calwegs fare nek paphits bebe = net capita! wm pod. UP Shem capital ® — easeaned © pepentane + YE omy ani- ey | sell stock. x yor qnvesrmet 2.00000 * you bough % used * yes So! 7 so your wet employer vetoes Cloth | copitel om inwm +o] +o he otal of gd YWONLE!: regan’), ; en stock. a Coy 13,0000 eg iQ tle = car for 160000 polit wet 0,000het wed He Bela om pou Investment 7 4g 90S Role als vgooas “= bo, A® yor inva tet gv00d PS, one For" late pact 60,000 Ahel- Sad Hho gto Hey “10:00 7 your vet _ Now — your numbers in 40 tha fonmulta, “YO see eee Snvedtmend — wed negative, minty PF emcent Por = bogs __ x wo = 2), 206 por ened ot rt yw bY oo JOR ey 23 2490000 qen yor see aw \4n.ooo , or ner erokit] Loss * 60,000. BR. _beDo. good ive = “S07 ~ RSL= ~ gx000d 1 §.0-008Sas eps fs Ean yon comings For = e cers) = jhe neretionship ln net poofitg ond the op shames outstanding at the end numbed ques peared . qs can be companied cath pa ewionsds qeoss ee proisie basis fon assessing ae Compan performance ErS= Cnerpnc gE civen te Humbert ot shamed wo000 od HH prokt dawes for & qe accounting pemiod Rs spi000 RS He EPS be colciated Foltovss: solr Giyen that number of shamed = 10,000/— profit rows = 901000 FF 5 ene en Bes = Grave ourstenaings 7 410/009 40,000 = As — que igen tee es TS se wore STKE AO ve He demend — for dle shone of tet Componefe power, TH to be noted — that EPS 2s one, of he wom factors effecting He demond fo o ge shoeye dividend yield = puree 4 of Foted — etn yield sefers to the camount the imeltey vl meceive for om gives pesicd of he? Poy the omout of his yavertent yield eters 4 He pemecetage aed . os grey —~ ‘In generals yield ond aise ee investely paopoa tional. ale higher He yield ne fled Tu othe words, one siskian = om He lowed) ments ome qe inveatn emt. Safed —— thak the inves the ys> pore pace} caaming Ratio $= PRE! cone an gividea by the p/e rato, paice early RatDd Sere Hankel paiice per Shame | rvice | earning Ratio = eannings pert Shore Given that makes price of a Shore fs PS BLO gua eps fs IP calculate PLE natio ? masiker pace PA Shone Ple = pen Shame, eamning eps = aro) 10 =>8s - > S eamning — Powest notio f= 7a —~— . eos ng pow progabilty — figmm Com sel quantity oF higheg smal price ov 10aye quantities ok relatively Lowen pny FO continue te &E waking profits. Sq oe AS He eosming — power of tHe. Compomy qs based on 4wo Pactoas. net parotit mongin omd t june) Ww &» aa Inve mena Thre furtors together peasend oe comple Picture ob the, ePbectiveness of the fivmi's opestations The pedcentoge of sretumn 0" javegpment Ceol) com rightigh 4ho firms openesting eftiaency pot meflects tHe Coarningy pow amd ik 1S the pooduet of het poott mongiy omd investment funnoved) . easning Powes) = Rem on investment a Net profit moangin X caveshnenr Husmnover) perprngit of sod soeg ne 8 SS P sad totaal Copitey ver faotit Hen den Total capita) pene the orl capital meq mean (eo tole assets ov ) equity shure copitel The, following, exonple- iNustredtion the concept ot eanning powed).=> petivi ‘ac petiidy Ratios tm petivity credios express HE sbeks, callectogs ane ‘three +yr3 ackve we firm is ™ hod fs -veceiverbles arcl i qeoms of selling perfing iS coueditey§ » Thede OQ Tavenory usind ve @® debtors Tusinove Raid . wa Ratio. @ — careditor's Humwover Ratkd. 2 Znventory — tearroye Rao —— Flea tele tt is algo called =o stock Aumnoved ara ho. Tt Ps indicerted pee | Humbe of med Ane avarage, Stock gs being said dusting given accaumrting qeterion Pin Ae egtoblished she ° pumiod. Ib fs cost of the gia | wing given pemiod omd the omooge amount op inventory puisanding durry mentery runnoen/ tha pemtiod The. high the the beth Fs he peartoy mane i8 Stock8 - lvea Of given yellow. ato. firm in Tt fs selling calc-Averoqe inventor] 1s the overage oF opening Steck ar +e begining of the yearn amd He — closing Sock uk the ena of the geo, that F5 sto! ing, Sek. za ae —_— implies the. eh hdery A higher inventory +tusnove yatio yer FohD of te vm heveag (0% inventory HNP unaicatey that ae em TS Oe position jo cleov Ree shot. rom inventey unio VO" watio , we car also inventor} Dello. dekomine We holding pemidd - re ts actemined a given ex Firm ola goods worth — SS. $00,020 ona itd no pencett of sala? . The inventory of the «you! wad RE _1b,000 one se wet “e000, Comeute LDverto— qross pnokit is ok the beg! rine at end of te ye ond also +e javen Por"d hol ding, fun nove restio peniod.=> calication of Tnventory — novest gato To ven -retio, we need ta SE . cariealuted — Tnven v4 4tusno) of goods Sold ond ovencye Shek. Cost of goods Sold = Sale? — Grross prot. soli— (2 Goss pofit= Qoh of Saleg value 4,@ PS 1,00) DOD st of — goods Sold = Rs 500,000 — 1,00,006 = 4 100,000 sosiage inventory = Citjoo0t vrieen) /, rr] >(y Wee = 13,000 — sok cstot goods : oy uiove atid = average invertor Brven'o $100,000 ee r 15,000, } = gb bb ut — oven mis mest Teer tuaing He gear he a gous ts being sol 4 bbe Fwd . od. © soventery retain rene Savenieny Mor novert wee 3 gb. bb = b 64 aay eo ly dows exppron mecteld. =_—(2) => Debtoy’s Never Ratio {= eee a Debtors — /uNhove eho vevests the numben of tins the arencge debtors ane collected duming peniod. In otler a position = te a qv accounting woods, ik Shows — how quikly dhe firm ist calleck its debts. re fs necessary to keep closing of clebit dye woaking capital peptor's — Testhove mone toning of — aelisection pecome Tt divectly effect position. Ratio Fs calculated 8 # ‘yen bellow Gaal sal pebtors — -temhoven ape = eg Peetag & olebtors * wheoe cored sales wef + qoods Sold on credit, evere4e clebis He overage of opening ond desing palances ot for te re" debtors accounting peatioct . ¥ A higher debs tunnover atid firm IS efticienk = caltectny 146 depte wheres lowe ryatio signifres ibe inet icin Debt callection §—peaioel | pet — callechon peoiod ve fee dy the time deteen to callech'ow the debs. from cdlebtor's. 4usmovest ecto. we com dind ovr te debt —_cattec Bon pemiod -follduis. debe callecton peniod = sos[auq) | deb eto que ease HE dime wone 5 the cthicieney of the fry gud vile veorse .ero ple oxo A dixm's — Saled dusiing fhe. Yoom wos PS 40,00, 00fe at which 60 peacentage woene on Conead asic . The bance. of aebteas the beginning = ond end of the Yor) were — 9.54000 and 15,000 respectively + calculate debtor's pysnov| wetin OF tHE Sivw ANSD Bind ue debt collection =P esi. air Given Pet saves ausing Seo 240,00 Ged bow. be ginning: debtors = 25/000 emding pf -Hwount = 15/000 coe ditsaleg= Sethe of 42,000 = 2, 42)000 x fvenoge debtens = Coping Lalance of delohors pelo) = (2s;000+ 15,000 ) Jo = 20,000 Caliculation — OF debtor's “tustnove™ ryetio = 3a 1000) 2/000 = 1Qee, gy WR Exewnples dle frm fs collecting its avenge, ckbtort's je timed = during the given accounting peaiod clebt collection period Soe debs tuenovel oertio 2 FE 12 = 30-41 ae on on | | average, eve tiv 7S dakiny ground ay doy o collect 148 debts.Lye neditoas esmoven — Rah Ran pet coeditons — Fusmover Tet reverse Umber of Himes coneditons Ane ped causing & given ceaccounting how | pacmply th By a fs necessoryy sched is betauje phe average period. In other wonds. ib Shows fein a Position to PAL its coneditons of payment go Kecp — “lose wmpnitoning 2b dinectly = abtels He wong copitel position . In cose, the Firm % noe in ox position 40 POH its creators ie wil affect the goodwill ov funthen — supplie moy be qwrotf. TD be on sate Side, mask of tHe LivmS smeantoan He GS lick of the ceneditons whic probs phe aeteilt ot when to PEs how wu to poy ond be whom yo POP oe calculated «8 qn pellow enedit —~kuomover yato WS peniod bY using pogrnent pestiod =—_—a— capital stem cle eRedios cose? Reias | Solvency 8) “_ wN~w“~_errr”” copitel staucluse 0 leverage ato 4s difined of ake financial rato, which focusses the Tong 222% Solvency} of the om, TRE Yong - te solvency of the Bam Fs MGS mefiected in HS ability *° meet Hs long jen conmi Sends wucn 8 popimen op imremess —_pervostcally without aly ne pegrn ent of paiincige? Vad nal nat" due. Ay he Financial inch dons of fearing Jong - 3% finance oe yaiesesied ywege — rahiOS- qne following §— HN Hhe = ost commonly wed capita} grauctine — Medios. (oa) debb- equity gecto- Ce) Inleaest caverns ratio - (ce) — Resto of — enopatietenS funds yo deter assets. cay Rai of «= Fined Ase® fumdt Gi Recto ok unset Assert pmoprictos PumasOW debt- equity Cope) Rahd a= Sa Oa Debt — equity mato is the gato bln outsides fumes, Cdebr) ond insiden's funds Cequity) Tis gs sed srentsst - . ‘ jo the ake firm's abligs¥ons yo emeditons in crelotion owren's funds, TE for dis rao. ond gy the,» mensvne of saventy * me yoo Te AL oto OE unas, toe 0 wosrth guped of debt , thene should &E one) mUPe® o fnteaned funds for eamplei= — = Fi F epend ais ts also industry | sectov pea ic ano: “ my) upon the. industry, the standasd for Wwe aevl— equity vyato. ditfens. for imstancts i i sive in cose oF copies . ‘ 7 ree! amernateeen industry such 8 Shipping comport an 7 co i ; Ahis FRO pea nieg. the ple vedio om" be vigh 28 So ; tun oF nay to be inka paneer consid 4 ae industy ond Coupektorrs ole roti { peer — eauity -ratio fs coruulaled Apionfunds include debentuaes , bonds shaneholden's fund oY equity Cuoth paretenence ond equ Debt ov outs) den’ yong — tome toons, and So on hene — includes ‘shane cape! nese Chol gener! ama sped fic) ne tained casings does wok only caully Shoe capital. equity hence Ts ink neted & \nsidea? z _ts_inkes ee funds » debe were ace only YONG eam debt funds 6 260 " omd seach others equity Caleulaka debt ews ewio from Ww aura gen ake out sidoa'S funds , Long Jeam tom 1100) 00> debentunes + long deam — 0rd | = 400000 + 200,000 asides fonds = b,09000 > ean Pare feoence Shore capital 1,00 +000 , emuity Shune Resemve 2801000 , pnott oud lose copitel 1901000 + treme) pecoous® 109 00D a3. Long yea ebb = pscr eae + ORT PF) = 1,00,000 -t 11SP1009 F 21801000 * 1;00)006 = yegooo = dee = =pebt Debt equity 1,00 which —-meks qpte Tntenest aa 2 Inienest Firm's ge qwus an wnoty paren aako oY of the yeasts othe, wed, hes no Tn senes* follows’. of debt, covenage rato capacity +0 poy He idea oF We contrac out dhe Lor ower poro tts Problem ™ anleoot verge equity yatio = debt eal ec ___bibe 00 6,00 000 “A ty means Meet tor equity fund ot vst Tis TS voto of 1 si Here fs 0" of Fel “the Standard yomastic Sali sfactony covenage Raho b= ae see ee” - calculated —-¥° judge Me iterate om det gatent the Hrw's caowin gs unabe + me eal very imposten is ie bovre u fs 4 eqnvingS Tt do judge ie corre befove oF currer Ts ins tution are jhe loon Frown rabor betteo, wis 1 implies eect a contoniy, intent. Bnancie’ do seavice- que fighea esti peeing rato Ps a high calculated oS Covenof> weno Gtr A intense cnengeh Ratio = ieeeThe mone tre Mumbo oh Himes ok COMES the besten is the Solvency, posi Ho" vf the borrower , ew eagnings be foy in tes sot omd taxes CeBiT) oF ae company TS RS 5 0/000- t's fixed Commizrnents include. Pay monk of lo % on 700d debentures of Rs loo each Tt gs subjeck A of 30% pen exmnum- an calculate inlenes® — Covey © ako. nek paotit before jntenest oo 4oves = 5,b0,000 fixea interes Cheng on the deventuors = (4e00x 100) 101. = 4,000. Intonast cenerege natio = (5,60,000] 40,000) = Btmeg Tnkeores* — covenage. atin of 8 Fmd wmeans that the net prot — eanining one B med do te tines ‘tera choangel payble dusing the geet she mone the ruumben of med the — Coverage the Sapo Te He investment» autending — Financed 40 such @ — Compormnty getting a net Pooft covening Stim? of i Fined changes » Fs @ sofe bet for a He lence.=> Ratd oF we oO! qws — eStabli shes Th funds and the joka wdude the Jongivle a quidelin’ os the fs censidened valf of he words. the — ondinadl} contsilactoas of qoodwill ane not Proprietors par pric tons aa a yoko g Jangible shone holder's other onediton's. I” tangible consider fan funds to testa we oR asses bln propaictor's he tote current ase, anelation ship ene + asset assets assets Sned Pus oy SU! othea, anor Sil desivable. =n ane owned by ens ond neal? bY smini mu asses On awh! ayes pp Sham ond Joan capitsl asses such OS peconte pik dhe goodwill wo hot the Patrie— ene oft — foacibly » sThis. showS yn he onqoni sohOh, Jalal Asset tends ds 4D Avital assets = a, awe doled ASSESHD Compute rat of paopanie tom's funds to tet) pscee from the dats given in exemple oe she = ato of — Paoprieton's faunas tote) as follows, asses Com be ComputedPaw prnicton's funds = 400,000 FS qolal Asset8= 1S; 00/000 Pare fenence shane Caital = 100/000 ewuity chave. Copital= 150/000 cemenal yeseave, = 718D/000 emp lope parvicien* fund = 100,000 rab account = 2,00)000 = 00/000 Ratio of pow piers funds to tetal ASseH = Pow paierons tnd cfota) #ses Xe = 700,000 15,00, 000 X100 = wb, bb = Wis neveals thet 666 7. of He toto) ase ane Hinanced Lp propsiietey'S — Samds. In then words the balance. C53: ap) Ps financed by outsider 's Funds. — pis ratio fume Exploined In a fine Wye oy cons goring He volume of Fed asses omel cunownt — aeer's dhe poropsiirom's Funds sepanatlyGJ Ratio of fined e. a we nN oo Pacestie ton ds t= Explains whether he fined Asselg have bee paopricters funds or vot, bY wmectchiny TiS Facto ought — Prom the tong 4™ investment with the Sond deam finance. Te Ts possible to deboanine hetken HE Oro] wed been made to finance Bived ASSEN ze Is wot sae FD Use chovt- dem Finance 4 buy . long term esse % +0 be yapoid theme ih yb be aeblily becom when the borrowing be a problem a the fined Assets canme Conver ted into Cosh, The tong — ferry Souncel of finance Can be used tov buy ing cannen* assets but nnd Shoyt — Fo souncer of Finance con be mised 4 ocamaire fined assek. yaks. shows! aye gerne omned® ob pnopmiete ws Nonmel} Asy \ndusin Pande. vocked UP esiebelishe mens yais COM Pune. Ratio of fired esse? tp Pampa etors chunds _ Diner A503 at % 10d Paoprietors fundBxi— i Fas Compure atid of fixed assets to Props etomtS funds trom the deta given ta gxomple. ts Pumds we Bived assed ame = 5,45;000 ond Pmopricroy’ $100,000 Raty of fied Assets powprierrs 9% seli~ Given thot. Dinca ASSCAB = STATO , — papopsiietoa"'s fumas= F,p0 005 fined ASelP patio of fined ASSES to. fomnpanctey > funds = _ S145 0° __ yo 00,000 = Bry Considering — Akat this Is \ndusknial establishment B27, fs on very high Side. A lorge postion of prwpaiiekey in fined assets, This not a desizmble. Fumds FS Wocked => peck of Current asset to Pmopani etor't fum ae t= a oe Oe, eT — assee to paopnietxo A highen —-yato ok current do the business funds fo Gonsidered 8 financial — Strenght rk & necessary to beold gacpuate funds iy weoneing copii to genmemmte —prwbils mis caliculeted follows — acsett Ratio of 9 current asgsels to PE = ————, #0 proprietedEronple —— Com pule 4 = gato of Current assets Fe pap aiters fumes the ea! ; . Ppa guts given In exemple, Cannent ascend 4, ; rg;000 PS propriety © funds - #100000 Soft— ~ Ratio . of Cuvren ascetd to PF = Corremt PSC roy poepaietes furds 1254000 = ee xo 00,000 = 1327, Preven — s_ Sonn Power of finns gant @ all Te. ach novi dotal asscks There one 4wo fives pand © e wrath — ag gpm and overage nek paobis oF a ts goovo each: Hom p hag sales OF gs 100/000 avd Ham © ‘ i we) og gale of RS YOwOmVODS pereamine He coming He PP of both — Firms: rae PyomP a wer saled 4,090,000 7 - 10,00 0007 - »’ nek eno 20) 0007. Q4) 0007. ce Total assets Hob 10007, 4:90; 0007, 3 \eowts vnosngin (ela) ay. oy ec \rarghment seunnaver Cofe)) 0-287). . & cate) oie ii e oT coh cy. sy, AK bove able: yadud TS ve advantage of vighet Volume of sad when port magi Fs so low fim? aud mee, similar ROT yo thet of Firm © despite lower volume. oF = SLB peesse the prokit mongin ¥s igh=> Dupont chant = Dee the element Hat — go into computerion oF eusmings followin chost by pence ft TS called pou eve been. built ante the ou “Dupont — compo} for he dime ond pupon® Chose ~ SE % can be seen rot thE camming — POW is depenclent on wren yostiaisles - AMY change Sy these factors wil attect tee comning® power . xh te selliny price inonentes, it wil Inenecde the powtit oma vice ee paokte incmrese + will impIOVE only both jnomente thor com be th te cost ot goods sald Powe Verser. margin dedinel - The earning iP 4uanovern oy net paohit oF eoning Pow Fs an neon kon yotin compome ThE performances of used evant ond os aw whole rt fs os wen of she Firm com poartison aepoonenté Valuable ol do injen— hy a\so oo —— 7 spoke manginy NT \Jsotes cask y Prete mer pti ecole? Teen Seite Ppt epee S Serting. hams expenses yim pepo chet shoving tee elements = of — eomniny power ——> Linthations of Ratio srallysis = Livditettions Oe Rakin amallgsis, cleapite WS wide applications, fs not free himitodiens. A) Accounbag, gavins Oe oneknospeye = Accounmy me merknospe—— some compuled pos data of The roeo no} not Previous gen forman Ce. the ee fuel ond may nok nko fetus reoeesunes 225 where acounting qonorted fpyiowig ait nerhods C such 8 differen’ methods of a closing stock following $iko oY Life) conpor rele The Adiftemence ici ed jead + C9 pewontng eleets epreciesin accountng methods of — valuing nor shih methods on the notin ONE fn the acuunting distores con clusions « @) Tafladionamy jendendst irighlighted In Himes of inflotion, she accounting yeas commode = be Compares” meaning Ml: base ts connote on pol aati Ce t Hin Oe D conceghs patio oo" nthe needs _ the femnu be ecnli she ad on not the of the fiym Based uit up Companison — come + net uch CHC. Buaelitative tochs comot be techs Ri aw such 8 Character = OF ynanayeniied abil HES eared, hee . rk 7S Ww futons como pe Cosi omalgss FS puoely qpuombitative omaly tical