• 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. Principles of accounting

    the accounting records of the business is when he brings in personal property as new capital into the business, or when he withdraws cash from the business for personal expenses. Best recommended for a sole trader. Money Measurement Money is used as the basic measuring unit for financial reporting.

  2. Profitability and Liquidity

    available as cash and other assets that could be converted into cash within a year. Current assets will be use up in production and include stock and cash. The stock; for my business the main stock is T-shirts; this will include a range of colours and sizes, and creative-flex (this is the printing ink)

  1. A2 Business CourseWork

    Last year they added over 8,000 products. They also offer a variety of different types of product including: 'Healthy Living' products; 'Free From' products (free from food allergens); Special healthy Kids snack; Organic product lines and the widest Fair-trade range in the UK. These were all added through customer requests.

  2. Sainsbury's Ratio Analysis

    This could be because they have bought the stock from a cheaper supplier to keep the expenses lower than the last year (2006) which has made Sainsbury's perform better at this stage. Sainsbury's has not got a high gross profit in 2006 or 2007 but I think higher gross margins are preferable to lower ones.

  1. Interpreting financial performance using a range of ratios

    Net profit Sales x 100 = net profit margin The calculation for Whitbread plc would be as follows: 2001/2 76.4 = 0.0379 X 100 = 3.79% 2014.3 2002/3 237.1 1794.1 = 0.13215 X 100 = 13.22 These calculations show that Whitbread plc have increased there net profit margin by 9.43%

  2. Analyse the impact of the economic environment of business performance.

    in goods over time Impact on option If the inflation rate is rising it is worth while to pay of the mortgage early this is to minimise the overall value of the payments in the future. It also may be worth while paying some or the mortgage early as the inflation rate may continue to rise in the future.

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

    Debtors? days shows us how many days it will take the debtor to give back the money for purchasing goods on credit. Calculation for debtors? days (YEAR 2006): DEBTORS 45 X 365 (YEAR) = X 365 = 23.46 (24 days)

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