Financial Ratios and Measurementxve.pptx
MaryAntonetteSenen
51 views
28 slides
Aug 06, 2024
Slide 1 of 28
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
About This Presentation
Skip to content
preparing desserts ppt
preparing desserts ppt
SearchCopilotSchoolImagesVideosMapsNewsMore
Tools
About 140,000 results
Global web icon
SlideShare
https://www.slideshare.net/slideshow/preparing-dessertspptx/2557…
PREPARING DESSERTS.pptx - SlideShare
WEBFeb 9, 2023 · The document cla...
Slide Content
Financial Ratios and Measurements
How do financial ratios determine the internal strengths and weaknesses of a business? 2
What kind of business do you want to establish or put up in the future? How much capital are you willing to invest in your business? Within what period of time are you expecting to have your return on investment? 3
refer to the comparative magnitude of two statistical variables that are taken from the different financial statements of a business Financial Ratios and Measurements 4
Financial ratio analysis serves two main purposes: Keep track of the business’s performance Make comparisons with competitors Financial Ratios and Measurements 5
is a financial ratio used to identify the time required to earn back the amount of investment in an asset from the business net cash flows Income Payback Period 6
Income Payback Period = Total Investment / Annual Net Income after Taxes Income Payback Period 7
8 A shorter payback period is better, for it indicates that an investor’s initial outlay is only at risk for a shorter period of time.
Situationer: Juan Dela Cruz, Inc. invested P500,000 for a new production line, and the production line produces a cash flow of P100,000 annually. Identify the payback period. Example: Income Payback Period 9
Income Payback Period = Total Investment / Annual Net Income after Taxes Income Payback Period = P500,000 / P100,000 per year Income Payback Period = 5 years Example: Income Payback Period 10
11 Use the income payback period ratio to determine how long it will take to return the initial investment to the entrepreneur.
financial ratio and measurement that is used to calculate the efficiency of a business in generating profits from its revenue Return on Sales = Net Profit after Taxes / Sales Return on Sales 12
Situationer: Juan Dela Cruz, Inc. is in the business of manufacturing leather bags. At the end of the financial year 2020, Juan Dela Cruz, Inc. earned P500,000 in total net sales and recorded an operating profit of P120,000 after deducting all operating expenses. Example: Return on Sales 13
Return on Sales = Net Profit after Taxes / Sales Return on Sales = P120,000 / P500,000 Return on Sales = 0.24 or 24% Example: Income Payback Period 14
15 Return on sales , more commonly known as the operating profit margin , is a financial ratio and measurement that is used to calculate the efficiency of a business in generating profits from its revenue.
financial ratio used by a business to determine the percentage of profit that it earns in relation to its total resources Return on Assets = Net Profit after Taxes / Total Assets (or Investments) Return on Assets or Return on Investments 16
Situationer: Juan Dela Cruz, Inc. posts a net income of P2,000,000 in its current operations and owns P10,000,000 worth of assets as stated in its balance sheet. What is its return on assets? Example: Return on Assets 17
Return on Assets = Net Profit after Taxes / Total Assets (or Investments) Return on Assets or Return on Investments = P2,000,000 / P10,000,000 Return on Assets or Return on Investments = 0.2 or 20% Example: Income Payback Period 18
19 If a business wants to determine how profitable it is relative to its total assets, the return on assets ratio must be used.
Briefly explain the concept of the three financial ratios: Income Payback Period Return on Sales Return on Assets/Investments Activity 20
Part A. Answer the following questions briefly and coherently: What are financial ratios and measurements? What is the importance of using financial ratios in entrepreneurship? Questions 21
Why do entrepreneurs and third parties use financial ratios? What analysis can entrepreneurs get from using the income payback period? How would you generalize the interpretation of the return on sales ratio? Questions 22
Part B. Read the situation below, then follow the given instructions. Perry Manufacturing is a start-up business that was established two years ago. It engages in manufacturing corporate clothes for office employees and working professionals. Questions 23
It used three different financial ratios to gauge the overall financial condition of its business. The following results were obtained: Income Payback Period = 5 years Return on Sales = 20% Return on Assets/Investments = 35% Questions 24
How will you interpret and explain the said results to Perry Manufacturing? Questions 25
26 Financial ratios and measurements refer to the comparative magnitude of two statistical variables that are taken from the different financial statements of a business.
27 The two main purposes of calculating financial ratios are: to keep track of the business’s performance, and to make a comparison with competitors.
28
Download
Download Slideshow Get the original presentation fileQuick Actions
Statistics
- Views 51
- Slides 28
- Age 482 days
Related Slideshows
11
TLE-9-Prepare-Salad-and-Dressing.pptxkkk
MaAngelicaCanceran
31 views
12
LESSON 1 ABOUT MEDIA AND INFORMATION.pptx
JojitGueta
24 views
60
GRADE-8-AQUACULTURE-WEEKQ1.pdfdfawgwyrsewru
MaAngelicaCanceran
39 views
26
Feelings PP Game FOR CHILDREN IN ELEMENTARY SCHOOL.pptx
KaistaGlow
39 views
![Jeopardy_Figures_of_Speech_Template.pptx [Autosaved].pptx](https://slidepub.com/thumb/5828/284015828.jpg)
54
Jeopardy_Figures_of_Speech_Template.pptx [Autosaved].pptx
acecamero20
23 views
7
Jeopardy_Figures_of_Speech.pptxvdsvdsvsdvsd
acecamero20
24 views