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Finance - Processes ((A.) Planning and implementing (Record Systems,…
Finance - Processes
(A.) Planning and implementing
Record Systems
Financial Risks
Budgets
Financial Controls
Financial needs
--> Debt and Equity financing (adv. and disadv. of each)
--> matching the terms and source of finance to business purpose
(D.) Limitations of financial reports
Valuing Assets (DEPRECIATION!!)
Timing Issues
Capitalising expenses
Debt Repayments
Normalised Earnings
Notes to the financial statements
(C.) Financial Ratios
--> Liquidity (BALANCE SHEET)
current ratio ( current assets over current liabilities
2:1
--> Gearing (BALANCE SHEET)
debt to equity ratio (total liabilities over total equity
--> Profitability (INCOME STATEMENT)
Net profit ratio (net profit over sales)
Return on equity ratio (net profit over total equity)
Gross profit ratio (gross profit over sales)
--> Efficiency (INCOME STATEMENT)
Expense ratio (total expenses over sales)
Accounts receivable turnover ratio (sales over accounts receivable)
--> Comparative ratio analysis
over different time periods
against standards with similiar businesses
(B.) Monitoring and Controlling
Income Statement
Balance Sheet
Cash Flow statement
(E.) Ethical Issues related to financial reports