Interpret the contents of a trading and profit and loss account and balance sheet for a selected company, explaining how accounting ratios can be used to monitor the financial performance

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M3 and D2:

Interpret the contents of a trading and profit and loss account and balance sheet for a selected company, explaining how accounting ratios can be used to monitor the financial performance of the organisation.

Profit and loss account and balance sheet for Tesco for 2001 and 2002.

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Accounting ratios:

Current ratio: Current assets          = 2053.0

                    Current liabilities            -2756.0

This shows how Tesco finds out the current ratio using the current assets and current liabilities. It helps Tesco figure out the performance of their business.

Acid test ratio: current assets- stock

                                Current liabilities

Acid test ratio: 2053-929

                            ...

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