What kind of managerial decisions will you be able to make now that you have a b
ID: 2578121 • Letter: W
Question
What kind of managerial decisions will you be able to make now that you have a better understanding of what Accounting is, what it means, and how it is recorded? Walk your peers through 5 typical decisions you or your managers would have to make on a daily/monthly/yearly basis and how Accounting information will help you make these decisions.
After watching the video on Financial Ratio Analysis, which ratio would help you make the decisions described above? Explain your response by explaining the ratio. You may use a ratio more than once, but customize the explanation to each decision. For clarity, please number each decision.
Explanation / Answer
What kind of managerial decisions will you be able to make now that you have a better understanding of what Accounting is, what it means, and how it is recorded?
Answer:
Different managerials decisions that I would be able to make is to analyze different assets, how different assets are used by the company, how effiently assets are able to generate the sales for the company. How can I improve the efficiency and leverage of the company, are some of the major decisons which can be taken.
Walk your peers through 5 typical decisions you or your managers would have to make on a daily/monthly/yearly basis and how Accounting information will help you make these decisions.
5 typical deciosn that the managers needs to make:
a) Investment decisions
b) Reducing the expenses and increasing the revenues, overall improving the profitability of the company
c) Financial leverage of the company, analyzing the debt and equity ratio
d) Using the assets efficiently
e) How much loan can the company take and its ability to pay off the loan.
After watching the video on Financial Ratio Analysis, which ratio would help you make the decisions described above? Explain your response by explaining the ratio.
Answer:
a) Investment decisions - Different ratios like Total asset turnover ratio, profitability ratios can be used.
b) Reducing the expenses and increasing the revenues, overall improving the profitability of the company - Profitability ratios like Gross Profit margin, operating profit margin, profit margin, return on assets, return on equity.
c) Financial leverage of the company, analyzing the debt and equity ratio - Debt to equity ratio, total debt ratio can be used.
d) Using the assets efficiently - Accounts receivable turnover, inventory turnover
e) How much loan can the company take and its ability to pay off the loan -Times interest earned, Total debt ratio
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