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Return to the original worksheet Return to Bized ![]() ![]() W 1P: How Are The Ratios Looking?This worksheet looks at a ratio analysis of the accounts of Cameron Balloons. For more information about the work of the accounts department at Cameron Balloons you may want to look at the accounts explanation section. Step 1 - Accounting for the accountsBelow is a simplified version of the annual accounts for Cameron Balloons. As a limited company they are required by law to submit an audited version of their accounts to Companies House in Cardiff. This is an approximate simplified version of the accounts.
Step 2 - Rationalising the ratios!Now let's try calculating the ratios from these accounts. Starting with the profitability ratios: (N.B. If you need a reminder of how to calculate the ratios, you may want to look at the accounting theories section .) Profitability ratiosUsing the table below calculate the return on capital employed and the profit margin:
What do these figures show us? | | | | | Are they good figures? | | | | Liquidity ratiosNow try to do the same thing for the main liquidity ratios:
What do these figures show us? | | | | | Are they good figures? | | | | What does the comparison of the current ratio and the acid test ratio tell us about the company's situation? What can you say about the level of stock at Cameron Balloons? | | | | | | | Step 3 - Any more ratios?There is also another category of ratios known as activity ratios. These show how effectively the resources are being used by the business, and can be a useful measure. Calculate the figures in the table below from the information given at the start of the worksheet.
What do these figures show us? | | | | | Are they good figures? | | | | |
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