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UNIT 1
ACCOUNTING STANDARDS
WHAT ARE ACCOUNTING STANDARDS?
Accounting standards are a set of guidelines and
principles formulated by an authorized body for
preparation and presentation of financial
statements.
FINANCIAL STATEMENTS
RATIO ANALYSIS
TYPES OF RATIOS
1. Liquidity
Current ratios
Acid test ratios
3. Profitability
Gross margin percentage
Net income percentage
ROA
ROCE
Price earnings ratio
Earnings per share
Dividend pay-out ratio
Dividend per share
2. Solvency
oDebt to total asset
oDebt to equity or gearing
oTime interest earned/interest cover
Activity/Efficiency ratios
Inventory (stock) turnover ratio
Payables or creditors payment
period
Receivables or debtors collection
period