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.
Here is some info on metrics:
Gross Profit Margin:
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.
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:
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 ...