Gearing ratios
These measure the financial risk of a firm (the probability that a firm will not be able to pay up its debts). The more debts a business has (non owner …
LIMITATIONS OF RATIOS
he following limitations are inherent in the use of ratios: – 1. Historical information. Ratios are computed from past statements thus giving historical information which may be irrelevant for future …
USES OF RATIOS
Ratios can be used in the following ways: – 1. To evaluate the ability of a firm to meet short-term maturing financial obligations as and when they fall due (liquidity …
FINANCIAL STATEMENT ANALYSIS/ RATIO ANALYSIS
Financial statement analysis is the process of identifying the strength and weaknesses of the firm by establishing and analyzing the relationships between various items in the financial statement. This relationship …
DEBENTURE LOANS
The term debenture is used when a limited company receives money on loan, and certificates called debenture certificates are issued to the lender. They are also called loan stock or …
FINAL ACCOUNTED OF A COMPANY
The profit and loss account of a company, is the same as that of a sole trader, but there are additional expenses that are unique to the company and therefore, …
SHARE CAPITAL OF A COMPANY
The owner’s interest in a limited company consists of share capital. The share capital is divided into shares. A share is the smallest unit of ownership in a company. The …
COMPANY ACCOUNTS
Limited companies come into existence because of the growth in size of business and the need to have many investors in the business. Partnerships are not suitable for such businesses …
RETIREMENT OF PARTNER
When a partner retires (i.e.) leaves the firm and the others partners are left to continue with the business then the retirement marks the end of one partnership and the …
ADMISSION OF NEW PARTNER.
When a new partner is admitted into the firm, this marks the end of the old partnership and the beginning of a new one. The new partner will have to …