Ratio analysis and the applications - Essay Example

Only on StudentShare

Extract of sample
Ratio analysis and the applications

The first one is that valuation must be done in a prudent way. This means that when valuing assets on should make sound decisions in order to value the assets in question correctly the second principle states that; profits that are made in the balance sheet are the only profits that should be included in financial statements. The third principle stipulates that depreciation should be considered when reporting for a financial year regardless of whether it causes a gain or a loss. An example of where the prudence concept is normally used in accounting is when calculating profit or loss. For example, some liabilities are based on the possibility of an event occurring in the future and is expected to generate a profit or loss. If the likeliness of it happening is more than 50% it should be recorded depending on whether it results in a profit or loss. An example of such an event is a law suit. b) The Matching Concept This is a principle in accounting that stipulates that charges and incomes which relate to a financial year must be recorded regardless of the date when the payment of the charges or income was receipted. According to (Hoque, 2006), it is the accounting approach of allocating expenses to their respective incomes. The matching principle of accounting is governed by a number of principles. ...Show more


Name Instructor Date Ratio Analysis and Applications Question One a) The Prudence Concept This is a concept in accounting that requires wise decision when preparing financial statements. It is viewed as one of the important frameworks of accounting. The prudence concept is usually used in issues of risk and uncertainty…
Author : ireichert
Save Your Time for More Important Things
Let us write or edit the essay on your topic
"Ratio analysis and the applications"
with a personal 20% discount.
Grab the best paper

Related Essays

Ratio Analysis
Entertainment is a key area which has been targeted by several leading companies; apple is a classic example of one such company. Ipods have become a daily necessity for several people, Ipads have been selling like hot cakes and there are others products that are being manufactured by Apple which are doing reasonably well in the market.
4 pages (1000 words) Case Study
Ratio Analysis
In the words of Gibson (1982, p. 18), “probably no tool is more effective in evaluating where a company has been financially and in projecting the financial future of a company than the proper use of financial ratios.” This work discusses the importance of ratio analysis and how it helps in assessing a firm and its prospects for recapitalization and continuity.
3 pages (750 words) Essay
Short and Long Positions
The major difference between a forward and an option is that while a forward contract must occur, an option holds a fifty percent of occurring or not depending on various determinant factors. A forwards contract exists as it can be utilized in a situation without uncertainty.
3 pages (750 words) Research Paper
Ratio Analysis
Financial reports are analyzed through complex tools like a closer look at the operational side or a rather simplistic approach comprising ratio analysis. This paper, however, aims at analyzing and assessing the financial performance of Go ahead Group Plc with the industry and its prior period annual reports using ratio analysis.
6 pages (1500 words) Essay
Ratio Analysis
3 pages (750 words) Math Problem
Ratio Analysis
The investors and customers of the company will use the information in rating the company’s performance over the last previous years. This will help management in knowing their strengths and weaknesses and will adopt mechanisms to take advantage of the opportunities and minimize the threats that may exist.
6 pages (1500 words) Coursework
Ratio Analysis
The study has provided insight analysis financial ratios of ASOS Company. Whereby, a comparison of financial results for the two years was executed. It can be observed that the financial performance of ASOS Company was higher in 2013 than 2012 based on the financial statements and ratios computed below.
6 pages (1500 words) Coursework
Ratio analysis
The comparison would be within a firm between two financial periods like in our case where we want to analyze Apple Incorporation’s financial statements for two financial periods. Secondly, the comparison could be between firms operating within the same industry.
10 pages (2500 words) Essay
Find out how much would it cost
to get a custom paper written by a pro under your requirements!
Win a special DISCOUNT!
Put in your e-mail and click the button with your lucky finger
Your email