PEV - Ratio Analysis

princess
princess Registered Posts: 80 ๐Ÿ’ซ ๐Ÿฏ ๐Ÿ’ซ
Hello
I am resiting this paper and last time i failed section 2. I was just wondering if anyone had any "idiots" guide to the ratios?? I get stuck with the RONA and ROCE besides all the others!!

Would be really grateful if anyone could help!! (PLEASE)!!

Comments

  • dobbieobby
    dobbieobby Registered Posts: 231 ๐ŸŽ† ๐Ÿ˜ ๐ŸŽ†
    RONA=
    Profit from operations / Net Assets x 100

    ROCE=
    Profit from opersations / Capital Employed x 100

    The answer is really in the letters, ROCE = Capital Employed (or just Capital)

    RONA is on Net Assets.

    You only need to remember the Profit from Operations bit really :-)
  • dobbieobby
    dobbieobby Registered Posts: 231 ๐ŸŽ† ๐Ÿ˜ ๐ŸŽ†
    Oh, and in those exams it's 'Net Profit', not 'Profit from Operations'
    Sorry, I'm doing DFS, so it's had a name change!
  • SandyHood
    SandyHood Registered, Moderator Posts: 2,034
    Do you think it would help you if I did a class on ratios (say an hour) and it was broadcast to your computer?
    Sandy
    [email protected]
    www.sandyhood.com
  • donnaalwill
    donnaalwill Registered Posts: 116 ๐ŸŽ† ๐Ÿ˜ ๐ŸŽ†
    I know what you mean about ratios, I am still stuck on a few myself. One I am definitely struggling to understand is the Gearing Ratio, I have searched posts and can see its debt/ debt + equity or debt/ equity from previous threads but I am finding it hard to relate without anything work work by. For example in the PEV June 2007 exam, Q2.1 viii) it asks for gearing.
    Is the debt the long-term borrowing figure? And this may seem like a ridiculous question but what part is the equity figure? I have tried to jumble some figures around to see what makes up the answer but I haven't had much success. If anyone could point me in the right direction as to what figures each ones mean it would be appreciated. Thanks.
  • AK002
    AK002 Registered Posts: 2,492
    Do you think it would help you if I did a class on ratios (say an hour) and it was broadcast to your computer?

    Yes!
  • A-Vic
    A-Vic Registered Posts: 6,970
    Do you think it would help you if I did a class on ratios (say an hour) and it was broadcast to your computer?

    Yes please
  • dobbieobby
    dobbieobby Registered Posts: 231 ๐ŸŽ† ๐Ÿ˜ ๐ŸŽ†
    Me too!
  • jow774
    jow774 Registered Posts: 465 Dedicated contributor ๐ŸŒŸ ๐Ÿต ๐ŸŒŸ
    Please Sandy, me too!
  • acc1077
    acc1077 Registered Posts: 138 ๐ŸŽ† ๐Ÿ˜ ๐ŸŽ†
    And me too please
  • SandyHood
    SandyHood Registered, Moderator Posts: 2,034
    I am definitely struggling to understand is the Gearing Ratio, I have searched posts and can see its debt/ debt + equity or debt/ equity

    Rather than worry about more than one ratio, I recommend (and only teach PEV students) one formula debt/ debt + equity
    Is the debt the long-term borrowing figure?
    Yes

    Not quite answering the: what part is the equity figure? question
    [size=+2]But debt + equity is the same as total assets - current liabilities (or fixed assets + net current assets)[/size]

    So often PEV papers don't have full balance sheet - instead a list of assets and liabilities
    if they do you can find the gearing by calculating

    longterm borrowings
    total assets less current liabilities
    Sandy
    [email protected]
    www.sandyhood.com
  • donnaalwill
    donnaalwill Registered Posts: 116 ๐ŸŽ† ๐Ÿ˜ ๐ŸŽ†
    Thats great, thanks Sandy! Its not covered in my textbook and just couldn't grasp the specifics of it. Thats much easier to understand I'll work on remembering that now I know which figures to focus on. Thank you :)
  • SandyHood
    SandyHood Registered, Moderator Posts: 2,034
    Link if you'd like to attend the webinar

    Ratio analysis and the interpretation of performance indicators


    Date/time of webinar: 15.00 on Friday 27 November 2009
    Presenter: Sandy Hood
    Duration: 60 mins

    Click through the link to find out how to register.
    Sandy
    [email protected]
    www.sandyhood.com
  • donnaalwill
    donnaalwill Registered Posts: 116 ๐ŸŽ† ๐Ÿ˜ ๐ŸŽ†
    I'm glad I have that day off work for study leave so will be able to be there, I have registered my interest to the email address - thanks.
  • acc1077
    acc1077 Registered Posts: 138 ๐ŸŽ† ๐Ÿ˜ ๐ŸŽ†
    Thank you Sandy - I too have registered
  • princess
    princess Registered Posts: 80 ๐Ÿ’ซ ๐Ÿฏ ๐Ÿ’ซ
    Thank you Sandy - I too have registered

    Thanks Sandy, I have also registered!!
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