• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Use accounting data and statistical information to measure business performance

Extracts from this document...

Introduction

´╗┐Asid Ashraf Unit 7 Management Accounting: P3 Use accounting data and statistical information to measure business performance Prepare the first section of your report, which describes the general use of data you would use to monitor the performance of Mr Jones? business. Previous year?s data regarding sales, costs and profits, can be used initially to determine current performance as it tells you whether the business is growing or not it may well have changed its marketing and pricing strategies and it will want to know whether these have been successful. It may have introduced new products or targeted a new market segment and want to know if sales have improved following these initiatives. Previous year?s data regarding costs can be used initially to determine current performance because it is very important for businesses to monitors costs such as material, direct labour and any direct expenses to ensure it is aiming at efficiency and cost effectiveness of production. A good way is to compare the costs this year with the same costs last year. The business needs to compare the most recent sales figures with those of previous years to see if it is improving or not. ...read more.

Middle

A moving average is the average price of a security over a specified period of time. Analysts frequently use moving averages as an analytical tool to make it easier to follow market trends, as securities move up and down. A series of successive averages of a defined number of variables. As each new variable is included in calculating the average, the last variable of the series is deleted. With the moving average, an accountant employs the most recent observations to calculate an average, using the result as the forecast for the next period. Time series analysis is based on historical data. For Mr Jones business managers must identify whether the data shows a generally upward, downward or a constant trend. To help them to do these businesses will ?smooth out? the raw data by using moving averages. The moving average is usually either 3?period or 4-period, depending how often the average is taken. An financial analysis comparison in which certain financial statement items are divided by one another to reveal their logical interrelationships. Some financial ratios (such as net sales to worth ratio and net income to net sales ratio) ...read more.

Conclusion

should be as high as possible. A negative ROCE would mean that the firm had made a loss. In the UK, ROCEs are typically between 5% and 15%. This will depend on the sector in which the firm operates. Comparable data from other firms. The firms must be in the same industry and should ideally be of a similar size so that meaningful comparisons can be made. Efficiency: These are mainly measures of financial control. They are rarely seen in media headlines (or any other business stories) because they do not dramatically affect the performance (either in profitability or liquidity) of the firm. As a result, these ratios are more likely to be of interest to internal stakeholders of the firm, (managers, Mr Jones, budget holders, etc). These ratios affect how efficiently the firm operates in terms of its working capital management. As stated earlier, these ratios do not directly affect profit, but improvements in these could affect future profitability. Use of Asset ratios: This shows how 'effectively' the net assets (total assets less total liabilities) of the firm are being used to generate turnover. It will depend on the industry, but a rising figure may indicate that assets are being used more efficiently to generate extra sales. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our AS and A Level Accounting & Financial Management section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related AS and A Level Accounting & Financial Management essays

  1. A2 Business CourseWork

    This is because having people admiring and appreciating a contribution to something they feel strongly about could well lead to them shopping there; this will lead to higher profits. Tesco clearly see the environment to be a key issue in the business it has a whole section in their corporate responsibility report.

  2. Btec Business Level 3 Year 1 - Introduction to Accounting

    And deferred shares (the deferred share requires that dividends are only paid after certain amounts are paid out to ordinary shareholders). A mortgage is a large loan, income coming into the business, normally given for the buying of property. Business can take a mortgage and use it as an investment.

  1. In this assignment I will be explaining in detail the importance of cash flow, ...

    -1996.0 -1853.0 Net assets 3286.0 3183.0 Share Capital 1722.0 1727.0 Profit and loss account 1564.0 1456.0 Total capital employed 3286.0 3183.0 Weighted average number of shares in issue in the period 2057000000 2047000000 Merit 1 For merit 1 I will list the advantages and limitations of Cash flow, budgets and break even.

  2. Sainsbury's Ratio Analysis

    At 0.7:1 for 2007 is also below the acceptable ratio of 2:1 and lower than 2006's figure. A figure less than 1.5 indicates that the business may experience difficulties in meeting its short-term debts. These figures show the signs of liquidity problems at previous years.

  1. Financial Ratio Analysis.

    It shows slow payments from debtors, which eventually causes liquidity problem to the company. Change of credit terms and giving discount for early settlements might help Jin Yang Ltd to solve its liquidity problem.

  2. Finance, cash flow and insolvency

    for many reasons including: * their product is not well known * they are unlikely to be able to produce large quantities of output * It is difficult to charge a high price for a product which is not established in the market.

  1. I am going to produce a report which assesses the working capital management of ...

    Ratios enable changes in important aspects of a business?s performance to be pin pointed and quantified. The calculations of ratios enables trends to be highlighted and also ratios are particularly important to the owners, managers and stake holders of businesses as they will be keen to assess the performance and rivals will be interested too.

  2. Financial forecasting for business, Start up costs, running costs, variable and fixed costs

    Costs may stay the same or may change proportionately in response to a change in activity. Knowing how a cost reacts to a change in the level of activity makes it easier to create a budget, prepare a forecast, determine how much profit a new product will generate, and determine which of two alternatives should be selected.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work