Escolar Documentos
Profissional Documentos
Cultura Documentos
Presentations for
Finance for
Non-Financial Managers:
Seventh Edition
Prepared by
Pierre Bergeron
University of Ottawa
1. Ensure liquidity
2. Maintain solvency
4. Maximize return
Revenue $ 2,500,000
Cost of sales (1,400,000)
Gross profit 1,100,000
Other income 80,000
Total distribution costs (355,000)
Total administrative expenses* (590,000)
Finance costs (75,000)
Profit before taxes 160,000
Income tax expense (80,000)
Profit for the year $ 80,000
* Includes $20,000 in lease payments
Revenue $2,500,000
= = 3.1 times
Non-current assets $800,000
Statement of Income Statement of Financial Position
Revenue $ 2,500,000
Cost of sales (1,400,000)
Non-current assets $ 800,000
Gross profit 1,100,000
Other income 80,000
Current assets $ 400,000
Total distribution costs (355,000)
Total administrative expenses (590,000)
Finance costs (75,000) Total assets $ 1,200,000
Profit before taxes 160,000
Income tax expense (80,000)
Profit for the year $ 80,000
Inventories
+
Revenue
Trade Current Total assets
÷
receivables assets turnover
Total
+ + assets
Prepaid Non-current
expenses assets
+
Cash Return on
× total
Cost of assets
sales
+ Revenue
Depreciation - Operating
+ Total cost profit
Distribution of operation Profit on
÷ revenue
costs
+
Revenue
Administrative
expenses
• Limitations:
• Only give signals— do not answer questions
relating to why, what, or how
• When comparing ratios with other businesses,
make sure closing dates of financial statements
are the same
• Ensure that numbers used are similar
• Business size may make a difference
• Nature of the operations may also be different
(new plant versus worn-out plant)