ACC 310F Study Guide - Final Guide: Contribution Margin, Financial Ratio, Income Statement
Document Summary
Accounting unit 13: performance evaluation the accounting numbers can tell a more accurate story of how a company has performed than the company"s promotional material. Explain how companies use budgets for performance evaluation. Compute return on equity and analyze this ratio from an investor"s perspective. Compute interest coverage ratio and analyze this ratio from a creditor"s perspective. Compute debt to tangible net assets and analyze this ratio from a creditor"s perspective. Compute leverage ratio and analyze this ratio from a creditor"s perspective. We are considering the perspectives of the manager of a company, a passive investor (not involved in the day to day operations of the company), and a banker (who has lent money to a company; 3 ratios) Cindy"s cakes budget large organizations compare actual revenues, costs, and profits with budgeted amounts to determine whether they need to make changes to their products, marketing policies, production processes, or purchasing procedures. A good plan lays the foundation for effective control.
