Financial Ratios Help (1 Viewer)

[shibikoro]

hi guys so like you know how everyones like the formula is given you just need to know how to do it yourself yeah im still so lost on that and my trials is next week i wish i was kidding and im not sure what to do like what are some MUST things to remember to approach any question that aren't given
thanks

 

[oml]

hi guys so like you know how everyones like the formula is given you just need to know how to do it yourself yeah im still so lost on that and my trials is next week i wish i was kidding and im not sure what to do like what are some MUST things to remember to approach any question that aren't given
thanks

Most of the formulas aren’t given.. I think the only ones given are some from the balance sheet like liquidity and cash flow statement.. I fcked up finance bc I failed to memorise them and I just recommend doing it esp for the ones on the income statement like gross profit, net profit and know what the purpose of each statement is

 

[oml]

Mannn I rlly jeopardised my rank and possible band 6 cause of stupid finance

 

[C2H6O]

thank goodness i dropped ts bro i could not for the life of me what was going on in those crazy ahh formulas like tf is the COGS formula and what the hell is going on on a balance sheet

 

[oml]

thank goodness i dropped ts bro i could not for the life of me what was going on in those crazy ahh formulas like tf is the COGS formula and what the hell is going on on a balance sheet

brooo i knew the cogs formula but I still ended up failing the exam somehow

 

[reniiiblaseee]

hi guys so like you know how everyones like the formula is given you just need to know how to do it yourself yeah im still so lost on that and my trials is next week i wish i was kidding and im not sure what to do like what are some MUST things to remember to approach any question that aren't given
thanks

yes the formula should be given to you most of the time, unless u have a really weird trial paper. anyways, thats the least of your concerns. what you should know is how to interpret the ratio
e.g: the gearing ratio requires you to show debt against equity. the preferable ratio would be 0.25-0.5:1
if a business has for example 0.8:1, that would indicate that they have way too much debt and you'll need to comment on that.

just know the preferable ratios for each of them so that you can comment on them and get those marks, thats the most you really need to know

and if ur struggling with how to actually calculate the ratio, i suggest you memorise formulas like the gross profit formula, the net profit formula etc

cogs: opening stock + purchases - closing stock
gross profit: sales - cogs
net profit: gross profit - expenses

 

[oml]

yes the formula should be given to you most of the time, unless u have a really weird trial paper. anyways, thats the least of your concerns. what you should know is how to interpret the ratio
e.g: the gearing ratio requires you to show debt against equity. the preferable ratio would be 0.25-0.5:1
if a business has for example 0.8:1, that would indicate that they have way too much debt and you'll need to comment on that.

just know the preferable ratios for each of them so that you can comment on them and get those marks, thats the most you really need to know

and if ur struggling with how to actually calculate the ratio, i suggest you memorise formulas like the gross profit formula, the net profit formula etc

cogs: opening stock + purchases - closing stock
gross profit: sales - cogs
net profit: gross profit - expenses

Umm the gearing acceptable ratio is 100% or 1 unless it is given

 

[reniiiblaseee]

Umm the gearing acceptable ratio is 100% or 1 unless it is given

nah cant be cuz thatll mean they have the same amount of debt as equity, which isnt preferable for the business

 

[oml]

nah cant be cuz thatll mean they have the same amount of debt as equity, which isnt preferable for the business

The way I’ve learnt it is it’s 50% for smaller businesses and 100% for larger ones which is usually the case.
Small- How much debt is the business in compared to how much equity has
(or selling luxury items) 50% or less.
Large business: (or selling essential items) 100% or less.
If it is REALLY low, the business might not be taking advantage of its ability to borrow money (expand)
100% = Highly geared!

If a company has massive assets that are for key services, a debt-to-equity ratio over 100% is not bad (e.g. Telstra is usually around 115-120%).

 

[reniiiblaseee]

The way I’ve learnt it is it’s 50% for smaller businesses and 100% for larger ones which is usually the case.
Small- How much debt is the business in compared to how much equity has
(or selling luxury items) 50% or less.
Large business: (or selling essential items) 100% or less.
If it is REALLY low, the business might not be taking advantage of its ability to borrow money (expand)
100% = Highly geared!

If a company has massive assets that are for key services, a debt-to-equity ratio over 100% is not bad (e.g. Telstra is usually around 115-120%).

yes ur right abt the large businesses not taking advantage, but idk I haven’t learnt abt the 100% part ill check it out