Trend analysis involves comparison of the firm’s performance in a given year with other past years e.g. comparison of liquidity ratios for the past five years. Industrial analysis involves comparison of the firm’s performance in a given year with that of average industrial performance or norm. When carrying out trend and industrial analysis, the following four critical issues must be noted:
1.If a given category of ratios given identify the ratios in this category e.g. when requested to comment on the liquidity position, identify liquidity ratios. If the ratios are given identify the category of the ratios e.g. when requested to comment on times interest earned ration identify it a gearing ratio.
2. State the observation made e.g. incase of industrial analysis, state whether the ratio is higher or lower than the norm, and in case of trend analysis state whether the ratios are declining or improving
3. State the reason for the observation made.
4. State the implications of the observations made e.g. increasing gearing ratios, implies more use of external capital (borrowing) to finance assets of the firm.
Titany answered the question on December 14, 2021 at 07:01
-
Briefly describe what a stock market/valuation ratio is
(Solved)
Briefly describe what a stock market/valuation ratio is
Date posted:
December 14, 2021
.
Answers (1)
-
Briefly describe what a profitability ratio is
(Solved)
Briefly describe what a profitability ratio is
Date posted:
December 14, 2021
.
Answers (1)
-
Briefly describe what a gearing/capital structure ratio is
(Solved)
Briefly describe what a gearing/capital structure ratio is
Date posted:
December 14, 2021
.
Answers (1)
-
Briefly describe what a turnover/asset management ratio is
(Solved)
Briefly describe what a turnover/asset management ratio is
Date posted:
December 14, 2021
.
Answers (1)
-
Briefly describe what a liquidity ratio is
(Solved)
Briefly describe what a liquidity ratio is
Date posted:
December 14, 2021
.
Answers (1)
-
Explain two types of a basic financial statement
(Solved)
Explain two types of a basic financial statement
Date posted:
December 14, 2021
.
Answers (1)
-
Mwanga and Sons Ltd is a small manufacturing firm owned by members of the family. The
following trial balance was extracted from the books of the...
(Solved)
Mwanga and Sons Ltd is a small manufacturing firm owned by members of the family. The
following trial balance was extracted from the books of the company as at 31 March 2009:
Date posted:
December 10, 2021
.
Answers (1)
-
The following is the trial balance of Transit Ltd at 31 March 20X8.
(Solved)
The following is the trial balance of Transit Ltd at 31 March 20X8.
Date posted:
December 10, 2021
.
Answers (1)
-
Discuss the expenses that are unique to a company's profit and loss account and and not found a sole trader account
(Solved)
Discuss the expenses that are unique to a company's profit and loss account and and not found a sole trader account
Date posted:
December 10, 2021
.
Answers (1)
-
Differentiate between unlimited partnerships and limited companies
(Solved)
Differentiate between unlimited partnerships and limited companies
Date posted:
December 10, 2021
.
Answers (1)
-
Define paid-up share capital
(Solved)
Define paid-up share capital
Date posted:
December 10, 2021
.
Answers (1)
-
Define uncalled share capital
(Solved)
Define uncalled share capital
Date posted:
December 10, 2021
.
Answers (1)
-
Define called up share capital
(Solved)
Define called up share capital
Date posted:
December 10, 2021
.
Answers (1)
-
Define issued share capital
(Solved)
Define issued share capital
Date posted:
December 10, 2021
.
Answers (1)
-
Define authorized share capital
(Solved)
Define authorized share capital
Date posted:
December 10, 2021
.
Answers (1)
-
A limited has an authorized share capital of 200,000 shares of Kshs1 each out of which only
150,000 shares have been issued, Although the firm requested...
(Solved)
A limited has an authorized share capital of 200,000 shares of Kshs1 each out of which only
150,000 shares have been issued, Although the firm requested the shareholders to pay 80cents per
share, the shareholders were able to pay 50cents per share.
Required:
Determine the:
i) Authorized share capital
ii) Issued share capital
iii) Called up share capital
iv) Uncalled up share capital
v) Paid up share capital
Date posted:
December 10, 2021
.
Answers (1)
-
Discuss two types of share capital
(Solved)
Discuss two types of share capital
Date posted:
December 10, 2021
.
Answers (1)
-
Kyamba, Onyango and Wakil were partners in a manufacturing and retail business and shared
profits and losses in the ratio 2:2:1 respectively
Given below is the balance...
(Solved)
Kyamba, Onyango and Wakil were partners in a manufacturing and retail business and shared
profits and losses in the ratio 2:2:1 respectively
Given below is the balance sheet of the partnership as at 31 March 2009.
Date posted:
December 10, 2021
.
Answers (1)
-
Discuss some of the benefits paid to a partner who retires from a partnership
(Solved)
Discuss some of the benefits paid to a partner who retires from a partnership
Date posted:
December 10, 2021
.
Answers (1)
-
The following was the partnership trial balance as at 30 April 2009
(Solved)
The following was the partnership trial balance as at 30 April 2009:
5. On 30 April, the stock was valued at Sh.1, 275,000.
6. Salaries included the following partners’ drawings:
Rotich Sh.150, 000, Sinei Sh.120, 000 and Tonui Sh. 62,500
7. A difference in the books of Sh.48,000 had been written off at 30 April 2009 to general
expenses, which was later found to be due to the following clerical errors:
- Sales returns of Sh. 32,000 had been debited to sales returns but had not been posted to
the account of the customer concerned;
-The purchases journal had been undercast by Sh.80,000
8. Doubtful debts (for which full provision was required) amounted to Sh.30, 000 and Sh.40,
000 as at 31 October 2008 and 30 April 2009respectively.
9. On 30 April 2008 rates and rent paid in advance amounted to Sh.50, 000 and a provision of
Sh.15, 000 for electricity consumed was required.
Required:
a) Trading and profit and loss account for the year ended 30 April 2009.
b) Partners’ current accounts for the year ended 30 April 2009
c) Balance sheet as at 30 April 20019
Date posted:
December 10, 2021
.
Answers (1)