A look at the important concepts in finance

Type :

Term papers

Pages :

10 pages

Format :

.doc

Published date :

08/28/2009

Category :

Economics & finance

Sub category :

Finance

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Summary :

Introduction
Meaning of financial statements
1. Income statement or trading and profit and loss account
2. Position statement or balance sheet
Importance of financial statement
Financial analysis
1. Meaning
2. Meaning of ratio
3. Significance of ratio analysis
4. Limitation of ratio analysis
Types of ratios
1. Financial ratios
2. Current ratio
3. Acid test ratio
4. Capital ratio
5. Equity ratio
6. Proprietory ratio
7. Return on investment ratio
8. Gross profit ratio
9. Operating ratio
10. Activity ratios
11. Capital turnover ratio
12. Working capital turnover ratio
13. Debtors turnover ratio
14. Stock turnover ratio
15. Debt payment period
Operational definitions

Abstract

RAY G. JONES and DEAN DUDLEY observe that the word finance comes indirectly from the Latin word Finis. finance is defined as the "Issuance of the distribution of and the purchase of liability and equity claim issued for the purpose of generating revenue-producing assets. These claims are commonly referred to as financial claims".

According to PAUL.G.HASINGS -"finance" Is the management of the monitory affairs of the company. It includes determining what has to be paid for and when, raising the money on the best terms available, and devoting the available funds to the best uses.

Financial analysis is the process of scanning the financial statements with a view of getting the necessary information.

In other words, it is the methodical classification of the data found in the financial statements into simple component part or elements and establishment of relationships between the classified component parts and the explanation of the significance of relationships between the classified component parts as to the provide a full diagnosis of the profitability and the financial strength of a firm.