Ratios b new wan

debenture holder profitability

profit/non profit. mention roce

. improved/deproved from x to y.

satisfactory or not.

above/below risk free investments … %.

above current lending rates of…

holders satisfied or not.. eps increased/decreased, earning capacity increased.

suggests company planning for future and being strategically managed

debenture dividend policy

dividend cover inc/dec.

high/low and shows small portion profits payed out in form dividend to shareholder and retaining most for repayment/expansion purposes. ssuggests company planning future debenture holders will be happy

liquidity debenture holder

quick ratio has improved/not imrpoved. trend is good/concerning. has a liquidity/doesnt have one. finds difficulty in paying debts. for every 1 euro it has it has x in liquid assets for short term debt. debenture holder would be concerned as carrying a level of working cap unable to sustain

gearing debenture holder

gearing improved/not. satisfactory/not as lowly geared its deemed less risky

. debenture is due for repayment in .

nothing in accounts to show provision.

interest cover has improed / deproved.

decrease in trend but still able cover loan interest payments.

deb holders satisfied no difficulty servicing debts

sector debenture holder

… company is in the . industry. in short term this is good sector at the moment. risk/not risk employment. good/bad economy. in long term demand (problem)

fixed assets/security debenture holder

tangable fixed assets are… in balalnce sheet. debenture holders would be intrested to see if this figure represents any true value or dep has been accounted before. good security to cover debentures that are owed…

investments debenture holder

investments which cost company 240,000 now have value of x. debenture holders satisfied confidence of management in company and their decison making

intangible assets debenture holder

valued at … in balance sheet. would be intrested to know what this figure actually represents i.e goodwill patent etc which would have transfer value

conclusion

though their is concern over… the holders will be satisfied with performance state affairs and prospects of …

bank manager prfotibility

profitable company

roce is …

improved compared to …

above return risk free investments and cost of borrowing

efficent use resoruces.

eps has increased from … to … and will satisy the bank manager

dividend policy bank

div cover improve or not. state what it is negative positive trend whether the bank manager would be happy or not as they retain profits for expansion

bank manager liquidity

acid test racio test. for every 1 euro of short term debt it has in liquid assets to cover that debt. mention year before this is an improving trend above the ideal 1:1 no issue meeting interest repayments

gearing bank manager

gearing ratio is .

the debt equity cap is__

the company is lowly geared as below 50% this means financed more by equity then debt dont rely outside investors.

mention gearing prior positive/negative. less/more reliant on debt company still high/low geared.

if new loan was granted ..

interest cover. has succifent profits pay interest payments. year before improve/disimprove. more/less then covered

security bank loan

debentures are and secured against the fixed assets due repayment. tangible fa valued at .

sufficent security cover debentures.

existing tangible fixed assets if valued correctly could be used as loan security.(asset-debentures).

also have investments which cost x and are worth y indicates good investment decisons by management

sector bank loan

company operates in * sector.

short term prospects good/bad as///

long term prospects are also good.bad as

conlusion bank manager

should grant loan as company profitable and has low gearing

ordinary and preference shares diff

rate dividend fuxed preference shares. no fixed rate ordinary shares. preference shareholders do not have any voting rights crucial decisons related to companty whereas ordinary does. preference shareholders have priority when being paid a dividend ordinary only paid if company has enough profit cover payment

ordinary shareholderrs profitability

ROCe what it is dis/improvved/ positive negative trend

ROSF same thing.

company profitable. better then return risk free investments and preference share rate of x and the debenture rate of x. making/not making efficent resources

ordinary shareholder dividend policy

dividend per share is x im/disimproved. div yield is x compared to … higher/lower rreturn risk free investments. dividend cover is … neg pos. will worry shareholders/wont as enough/not enough retained for expansion

gearind shaeholder

improved/disimproved. low/high geared neg/pos more/less dependent outside borrowing. financed by debt more then equity. interest cover im/disimproved. could struggle with interest payments if trend continues. means firm may not have money for paying dividends expansion or paying off debts

sector ordinary shareholders

mention industry long/short term prospects problem/not problem

share performance ordinary shareholders

EPS. PER is . means take longer time earn back market price share current performance levels. share price has im/disimproved from 1.90 to 1.60 stock market has/doesnt have confidence in company

ordinary shareholder investment policy

market val investments lower then the cost of x and this x percent fall indicates poor management resources shareholders wont be pleased

limitations ratio analysis

based on historical data only. can become out of date very quickly even by time they are being used limited in use for when predicting future values

do not show seasonal flucuations within the accounting period

don’t take external factors into account e.g strenght economy global pandemics.

financial statements give limited picture of business like aspects such as firms market position external changes staff morale and relationships

disadvantages of high gearing

high interest repayments mean less profits are available for investments elsewhere. shareholders less likely to get ood dividend.. difficult to raise additional loan finance higher risk of liquidation

explain two ways to reduce gearing of a company

sell more ordinary shares reduce repay loans increase retained profits convert long term debt to ordinary shares

liquidity solvency

liquidity measures ability of company to pay short term debts as they fall due. acid test good indicator. solvency ability of company to pay all of its debts as the fall due for payment(long term). solvency most important indicator for businesses survival long term

hhow can a faster stock turnover increase profitability of a business

more times stock turned over greater mark up and profit will be increased.

each time stock sold because it contains mark up profitability increases.

if cost of buying extra stock increases at slower rate profitability increases

why financial interest of a company might be intrested to me

asses job security see if company can afford pay rise or continue pay wage see if company plans to expand asses pension security

users financial information

lending institutions trade creditors shareholders competitors

gearing definition

measure of how business is financed on long term basis. measures relationship between loans debentures and capital employed. when less 50% lowly geared above is highly geared. lower is preferable

benefits low gearing

low interest repayment means profits are avilablke elsewhere. shareholders mo likely get dividend. business find easier raise additional loan finance less risk liquidation

benefits preperation cash flow statement

helps business manage cashflow/liquidity better helps financial planning/decison making shows profit is not always equal cash used as part loan application stratedgy shows cash inflows and outflows. highlights firms ability to pay its bills

explain why profit may not always result increase cash balance

credit sales affect profit but not cash. debtors increase by x. crediit purchases affect profit but not cash. creditors increase by x.

depreciation affect of x.

increase bad debt prov.

what is a financial reporting standard

rule must be applied to all financial statement in order give true fair view of companys financial positions. allows accounts compared year to year company to company

distinguish between cash gain non cash gain

increase profit and cash e.g investment income and increase profit not cash e.g sale fixed asset

non cash item excample

depreciation loss sale fixed asset goodwill wo b/d prov.

what affects cash but not profit

sales fixed asset increases cash but not profit introduction drawings reduce cash no effect profit

special purpose profit or lose account

many non profit organasations run activities to fundraise to generate profits for investment. these expenses revenues relate to particular activity going on entered into ‘special profit and loss’ account

why do some clubs charge levies

to fund special project such clubhouse extension where club doesn’t want to borrow. must be used for purpose collected for

why are levies treated differently to annual subscriptions

levy receipt is on a once of basis or for specific number years credited levy reserve fund. subscriptions received annualy charged to members for use of facillities provided for club

levy life membership difference

payment fund special project such as clubhouse extension where it must be used for purpose collected once of basis. life membership entitles person to use faacilities for the rest of their life treated long termm liability

what is meant by the term sensitivity anaylsis

what if analysis. technique used by management accountasts show effect on profit brought about charges in

selling price sales volume variable cost fixed cost

why would you prepare a flexible budget

show management cost levels at different levels of production. misleading compare budgeteting costs at one level with actual costs at a different level activity.

to compare budgeting and actual costs to identify variances.

helps controlling costs or planning production levels.

compare actual budgeting costs at same level activity in order to determine if actual costs were more or less then budgeted cost

contribution and profit difference

contribution sales rev less variable costs. goes towards paying off fixed costs once paid off goes towards profit.

profit is sales revenue less total costs