Return on specific assets Return on Capital Employed the total assets of a company minus the current liabilities or – option of plus long term loans and provisions. This figure is an indicator of the owner’s eq magnitude of the resources locked up in the business and working for the shareholders and the providers of loans/debt Return on Owners equity Capital Structure Ratios Examines the asset structure of the company Analyze financing arrangement of the total assets and how much the company companies’ relies on debt Fixed to Current Asset Ratio x for every $1 invested in current assets, this company has –e invested around 1.31 in fixed assets Debt Ratio proportion of assets that are financed by debt – Every $1 that the company has invested in assets, 39.78 has been contributed by persons other that shareholders A low geared company protects its shareholders in times of economic hardship but by the same token fails to allow them to cash in on good years. Times interest earned measure the gearing position and margin of safety in relation to – earnings, measures the level to which earnings can decline without the company being able to meeting annual interest costs. Efficiency Ratios how effective a company has been managing its assets? – Inventory Turnover try to identify the raw material and labour components in the cost – which are deducted from turnover to calculate operating profit . This is a historic figure given on the year end figure of inventory and must be checked in management terms against the year to see if it is the common length for keeping stock. Inventory can act as a buffer for a sudden demand and it may be cyclical that this occurs at the year end/beginning of next and this is the reason if the figure is high. Equally in ’just inventory and the rapidly changing market for electronic goods makes large inventory a time’ danger for some companies. Average collection period sales outstanding is calculated by dividing debits by the – day’s – daily average of sales Fixed asset turnover related the fixed asset to the level of sales generated from them –
Return on specific assets Return on Capital Employed – the total assets of a company minus the current liabilities or option of owner’s eq plus long term loans and provisions. This figure is an indicator of the magnitude of the resources locked up in the business and working for the shareholders and the providers of loans/debt Return on Owners equity Capital Structure Ratios Examines the asset structure of the company Analyze financing arrangement of the companies’ total assets and how much the company relies on debt Fixed to Current Asset Ratio –e x for every $1 invested in current assets, this company has invested around 1.31 in fixed assets Debt Ratio – proportion of assets that are financed by debt Every $1 that the company has invested in assets, 39.78 has been contributed by persons other that shareholders A low geared company protects its shareholders in times of economic hardship but by the same token fails to allow them to cash in on good years. Times interest earned – measure the gearing position and margin of safety in relation to earnings, measures the level to which earnings can decline without the company being able to meeting annual interest costs. Efficiency Ratios – how effective a company has been managing its assets? Inventory Turnover – try to identify the raw material and labour components in the cost which are deducted from turnover to calculate operating profit . This is a historic figure given on the year end figure of inventory and must be checked in management terms against the year to see if it is the common length for keeping stock. Inventory can act as a buffer for a sudden demand and it may be cyclical that this occurs at the year end/beginning of next and this is the reason if the figure is high. Equally ’just in time’ inventory and the rapidly changing market for electronic goods makes large inventory a danger for some companies. Average collection period – day’s sales outstanding – is calculated by dividing debits by the daily average of sales Fixed asset turnover – related the fixed asset to the level of sales generated from them