Fabm 2 v2

financial ratio

compose of a numerator and denominator

profitability ratio

measure the ability of the company to generate income

gross profit margin

percentage of sales

operating profit margin

income as percentage of net sales

net profit margin

net income as percentage of sales

return on asset

computed as net income divided by average total asset

return on equity

computed as net income divided by average total equity

operational efficiency

measures the ability of the company to utilize its assets

asset turnover

efficiency with which the company is utilizing

fixed asset turnover

composed of property plants and equipment

inventory turnover

measure based on the cost of goods sold and not sales

days and inventory

much easier to appreciate the concept of number of days in inventory

account receivable turnover

measures the number of times the company can convert accounts receivable

debt to equity ratio

indicates the company reliance on death and liability

debt ratio

similar to the debt to equity ratio

interest coverage ratio

measures the company's ability to cover the interest

current ratio

used to evaluate the company's liquidity

quick ratio

stricter than the current ratio

solvency

refers to the companies capacity

business form

are used to document business transactions. is also a picture of a business transaction.

two business form

internal business form and external business form

internal business form

used only within the company. These forms may be used on the side of the seller only or the buyer only.

external business form

are used both inside and outside the company.

receiving report

is an internal report prepared by the buyer's personnel in charge of receiving deliveries.

check voucher

payment are made by check.

internal business form example

receiving report and check voucher

external business form example

purchase order, delivery receipt, sale invoice, provisional and official receipt, statement of account or billing statement

purchase order

is a form used by the buyer to communicate his/her exact orders to the seller.

delivery receipt

is evidence of delivery and it is issued by the seller.

sales invoice

is a communication from the seller to the buyer. It documents the amount of payment that the seller is claiming.

provisional and official receipt

are evidence of payment.

statement of account or billing statement

prepared by the seller and submitted to the buyer. reminder to the buyer of the amount he owes to the seller.