Essay on NO MONEY

Submitted By PG10
Words: 553
Pages: 3

M3:- Interpret the contents of a trading and profit and loss account and balance sheet for a selected company explaining how accounting ratios can be used to monitor the financial performance of the organisation

Turnover is the money that the business got from selling goods and services, £63,850,000 which is good because it’s higher than the less sales returns which is £250,000, so even if you take away the money of the less sales returns from the turnover you will still have £63,600,000 which is a good amount.

Cost of good sold is the direct cost of selling and making the product which is £36,000,000 and the expenses is the cost that you need to pay for and which is indirect, the cost of expenses is £13,350,000. Expenses are lower than the COGS.
Gross profit is the money that is left over after paying producing cost of good sold and which is £27,600. Gross profit margin tells you how well you are holding your profit. After calculating the ratio I have found out of every £100 of sales, the business makes £43.30 profit. To find out if its better, you either compare it with the last year’s ratio or with another business in same industry.
Net profit is the money that is left over after removing the costs and expenses, that is what the business keep, which is £11,325,000. The Net profit margin shows me how much does the business gets from every £100. Net profit margin is very useful when it’s comparing companies in same industry. You can see the percentage and how well you are doing in the business.
Return on capital employed (ROCE) shows the measures of return that a business is achieving from capital employed. ROCE should always be higher than the rate of which the company borrows because any increase in borrowing will lower shareholders’ earning, which can cause problem for the business. So a good ROCE is the one that is greater than the rate of the company’s capital cost. It shows how well the business has employed its capital.
The difference between GPM, NPM