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2.5 - Coggle Diagram

- - - - Calculate the profits for the year as a persentage of the owners equity (Equity here is thr share capital and any reserve)
        
        Owners equity = Total Equity of the Balance Sheet
      - = profit for the year (after tax) / ordinary shared capitall + reserves * 100
    - - = Operating profit / ordinary shared capitall + reserves + non-current liabilities * 100
  - - - How fast the sells its inventories.
    - - How fast to collect money from customers.
    - - How fast to pay money to suppliers.
  - - - To what extent the firms current assets cover its current liabilities
      - = Current Assets / Current Liabilities
    - - Excludes Inventory since it might take time sell
      - = Current Assets (execluding inventories) / Current Liabilities
      - The higher the figure the easier the comapany can settle short term liabilities, but not too high since it might indicate the firm is not using cash effectively
      - If the figure is < 1 the comapny might not be able to settle liabilities at short notice and face liquidity issues