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Interpret- Accounting
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- 1Mark-up Percentage of 50%Mark-up percentage for the business is 50% This means that 50% of the cost price of inventory has been added on to the cost price to get the selling price.
eg. item cost $1 it would be sold for $1.50. - 2Gross Profit Percentage of 60%Gross profit percentage for the business is 60%. This means that 60% (or 60 cents in every $1) of sales remains in the business as gross profit.
- 3Profit Percentage of 10%The businesses profit percentage is 10%. This means that 10% (or 10 cents in every $1) of sales remains in the business as profit after all expenses have been accounted for.
- 4Expenses percentage. -Distribution cost percentage of 25%The businesses distribution cost is 25%. This means that 25% (or 25 cents in every $1) of sales has been spent on distribution costs this year.
- 5Return on average owners equity of 23%Return on owners equity is 23% This means that the business has generated a return of 23% on the assets invested by the owner.
- 6Rate of return on Assets of 16%.Rate of return on assets is 16%
This means that the business has generated a return of 16% on the total assets of the business. This indicates the business is not using its assets very efficently. - 7Current Ratio of 3.1:1A business's current ratio is 3.1:1
This means the business has $3.10. current assets to repay every $1 of current liabilities. This ratio indicates that the business should be able to repay its short-term debts as they fall due. - 8Liquid Ratio of 0.85:1.A business's liquid ratio is 0.85:1.
This means the business has 85c of liquid assets to repay every $1 of current liabilities. This ratio indicates that the business should be able to repay its short-term debts as they fall due in the next 4-6 wks. - 9Equity ratio of 0.85:1A business has an equity ratio of 0.85:1.
This means the owner has funded 85% (or 85c in every $1) of total assets. This means the business is financially stable- the owner has financed more than half of the business and there is room to burrow more in the future to expand. - 10Inventory Turnover of 5.6 times.Inventory turnover for a business was 5.6 times this year. This means that the business, on average, sold the equivalent to its inventory on hand 5.6 times last year.
- 11Age of accounts recievable of 30 days.A business's age of accounts receivable is 30 days. This means that on average it takes debtors 30 days to repay their accounts.
- 12How to improve the inventory turnover-Reduce mark-up percentage.
-Increase marketing and advertising in order to increase sales.
-Tighten the ordering policies to ensure the right amount of stock is ordered and carried at any point in time. - 13How to improve age of accounts receivable.-Tighten the credit policies.
-Ensure there are good credit checks are done for every credit sales and stop credit if account is overdue.
-Introduce incentives (eg. charge interest on late payments).
-Send out reminder letters . - 14How to improve equity ratio-Owner invests more assets.
-Decrease liabilities
-Improve net profit by decreasing expenses, increasing gross profit (find a cheaper inventory supplier).
-Increasign mark up percentage by putting up selling price. - 15How to improve your current ratio-Increase current assets (by owner investing more money, getting bank loan).
-Decrease current liabilities (using money obtained to repay existing current liabilities). - 16How to improve Liquid ratio-Increase bank by- owner investing more money or getting a bank loan.
-Decrease current liabilities by using money obtained to repay existing current liabilities. - 17How to improve rate of return on total assets.-Increase net profit by:
- decreasing expenses eg. find cheaper electricity supplier.
-increase gross profit- finding a cheaper inventory supplier.
-increase mark up percentage by putting off selling price.
- - 18How to improve return on average owners equity.-Increase net profit by:
-decreasing expenses find a cheaper electricity supplier.
-increasing gross profit by finding cheaper inventory supplier.
-Increase mark up percentage by putting up selling price. - 19How to improve an expenses percentage.-specific example for decreasing expenses.
-eg. print advertising instead of TV as it is cheaper. - 20How to improve profit percentage-Specific example of decreasing expenses.
-find a cheaper electricity supplier.
-increase gross profit by finding a cheaper inventory supplier.
-Increase mark up percentage by putting up the selling price. - 21How to improve Gross profit percentage.-decrease COGS- find a cheaper inventory supplier.
-Increase mark up percentage by increasing selling price so higher margin on each product. - 22How to improve mark-up percentage.-Find a cheaper inventory supplier.
-Increase selling price to generate greater margin on each product.
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- Fichas sobre Interpret- Accounting, creado por tammy.walton el 18/06/2015.
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- tammy.walton
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