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Transcript of Business Project
sales to inventory
sales to net working capital
accounts payable to sales
stock turnover ratio
return on capital employed Stock Turnover (Inventory Turnover) WHAT?
-It is the rate at which a company’s stock is turned over.
-It measures how quickly a business uses or sells tis stock.
-It shows how many times during the year a business sells its stock.
To evaluate how well a company coverts stock into revenues
Return on Capital Employed (Primary Ratios) WHAT?
-It is the ratio that indicates the efficiency and profitability of a company's capital investments.
-It compares the profit(return) with the amount of money invested(capital).
-It tells us how much profit we earn from the investments the shareholders have made in their company.
focus on year's profit => all stakeholders are interested in.
To assess corporate profitability
To make comparisions of performance outside the control no relation to the business's ordinary trading activities shareholder's funds + any long term loans In terms of FY2009 performance, the ranking of the 5 palm oil stocks on ROCE, from best to worst, is as follows: 1.First Resources
5.Golden Agri Activity Ratios higher => more profit earned quickly
declinig=> higher stock levels
a large amount of slow moving/ obsolete stock
a wider range of products being stocked
a lack of control over purchasing service industry analysts do not usually use banks
transport operators... adopt just-in-time productionm techniques WHAT?
-ratio that compares the amount of capital raised from ordinary shareholders with that raised in loan.
-It must be carefully planned as it affects the company's capacity to maintain a uniform dividend policy during difficult trading periods.
-the interest on loans and dividends are fixed commitments, whereas the dividends for ordinary shareholders are not.
-the lower, the better
=> the company and the prospective investors.
-to analyse the capital structure of a business
-to assess whether or not a business is burdened by its loans. cost of sales = 30 euro
stocks=5 euro profit before tax and interest= 5 euros
long term liabilities=5 euros Long-term liquidity formula long term loans from banks, certain preference shares and debentures shareholders' funds including reserves Fixed cost or interest/ dividend: $ 6,000,000
The value of shareholders’ funds including reserves: $ 15,000,000
for 2004 for 2005 profitability profit erricson company Overall Inventory turnover was improved slightly