Financial Statement for Business Managers Research Paper

Financial Statement for Business Managers - Research news report ExampleFor example, the gross margin is the gross profit from operations divided by the total sales or revenues of a company, expressed in percentage terms. In isolation, a fiscal ratio is a useless piece of information. In context, however, a financial ratio can give a financial analyst an excellent picture of a companys situation. (www.finpipe.com)Similarly equation of accounting ratios of different grades helps us to indicate the trend of the business and the its various parameters and also indicates the results of various policies and measures taken by the management during the cut across of the business.1. ROI ( Return on Investment ) The most fundamental ratio under the profitability ratio category. It is the comparison of profit earned and the capital employed to earn it. The capital employed is generally taken as the sum of net fixed asset and net working capital.2. Gross profit dimension This is metr ic as Gross do good / Sales *100. It shows the relationship of Sales Revenue to Cost of Goods Sold and year wise comparison will throw some light on the efficiency of the manufacturing process.3. 3. Net Profit symmetry This is figure as Net Operating Profit/Sales *100.This is a very important ratio as its comparison over years shows the operational efficiency of the business if Gross Profit Ratio tarrys constant over years. ( Maheshwari , S N , 1994 ). Also a business to remain profitable , the Net Profit Ratio must be greater than the cost of capital.B. Turnover RatioTurnover ratios judge how well the facilities at the disposal of the concern atomic number 18 being used .The ratios are known as turnover ratios as they express the rapidity with which a unit of capital invested in fixes assets , stock etc. produces sales. ( Grewal, S T , Shukla , M T , 1997)1. Capital Turnover Ratio It is calculated as Sales/ Capital Employed and indicates how efficiently the capital is genera ting sales.2. Fixed Asset Turnover Ratio It is calculated as Sales/ Net Fixed Assets. It is very important in manufacturing concern as an improvement in the ratio over the years indicate prudent investment in Fixes Assets.3. working(a) Capital Turnover