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# Managerial Accounting and Metrics

I am doing a power-point presentation of managerial accounting. One of the problems that is stumping me is:

A few slides that might suggest certain metrics to monitor, how they are obtained, and whey they would be important.

#### Solution Preview

Hi there,

Here is some info on metrics:

Gross Profit Margin:
GP/Sales

Remember:

Turnover = Sales

Gross Profit = Turnover - Cost of Sales

The gross profit margin ratio tells us the profit a business makes on its cost of sales, or cost of goods sold. It is a very simple idea and it tells us how much gross profit per £1 of turnover our business is earning.

Gross profit is the profit we earn before we take off any administration costs, selling costs and so on. So we should have a much higher gross profit margin than net profit margin.

source: http://www.bized.ac.uk/compfact/ratios/profit3.htm

Debt-to-Equity Ratio
A company's debt divided by its equity. This ratio is used as a relative measure of debt, but it isn't always useful since equity is a complicated number. It's sometimes better just to look at a company's total debt per share, which you can either look up or calculate since Debt per share = EPS / ROE x Debt/Equity:

source: http://www.moneychimp.com/glossary/debt_to_equity_ratio.htm

Times Interest Earned Ratio:
A metric used to measure the ability of a company to meet its debt obligations. It is calculated by taking a company's earnings before interest and taxes (EBIT) and dividing by the total interest payable on bonds and other contractual debt. It is usually quoted as a ratio and indicates how many times a company can cover it's ...

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