• 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...


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.


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.


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

    The service aims to cut five million tonnes of CO2 emissions and reduce our customers' combined annual energy bill by around �180 million. The service offers fixed cost cavity wall and loft insulation for just �198 each (or free to those over 70 or on benefits).

  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. Profitability and Liquidity

    If I cannot make a profit, I will most definitely need liquid sources that are easily available. Task C2 Assets, Liabilities, Expenses & Revenues An asset is property owned and used by the business. The assets I have will consist of: > Current Assets: current assets are those that are

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

    1052.0 996.0 Cash at bank and in hand 175.0 134.0 Total Current Assets 2052.0 1940.0 Creditors: (Money We Owe in the next year) -2585.0 -2389.0 Net Current Assets (liabilities) -533.0 -449.0 Total assets less current liabilities 5282.0 5036.0 Creditors: (Money we owe that has to be paid after the next year)

  1. Financial Ratio Analysis.

    Therefore, the company can also pay its creditors on time, avoiding any legal issues for non-payments. We would not be able to discuss further on the Efficiency of the company (that is, Creditors Turnover period and Stock Turnover Period), as we are not given the sufficient information from the trading account, like Purchases, Stock and Cost of Sales.

  2. Accounting Ratios. By using ratios Hills System ltd can monitor their businesss performance. ...

    Business ratios help the accountants to check whether business can meet certain demands, such as paying pay creditors back. It also calculates the business's chance of survival; if they'll go bankrupt or have enough money to progress. They also allow accountants to analyse the percentage change in the firm, whether it is decreasing or increasing.

  1. Sainsbury's Ratio Analysis

    It is useful to compare the gross profit percentage with the net profit percentage as this shows how much of gross profit is being taken up by the expenses. A fall in Net Profit percentage would indicate that expenses were increasing and this should be examined to see where the

  2. Ratio Analysis. I am going to illustrate the financial state of Chester Private ...

    I am going to calculate asset turnover, stock turnover, debtors? days, creditors? ratio and debt/equity ratio. Asset turnover shows how well the business uses their assets. By working out the asset turnover we are able to know how many pounds the business earns for every pound invested in the assets.

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