Ratio Analysis

ACCOUNTING ASSIGNMENT RAIHANAH ZAKARIA A 0176 ARTS MISS jenny WONG Question 1 a) For each of the ratios contained in the table, briefly inform about special(a) ratios: The proprietor of the business including Goldpost, a mining tighten with several(prenominal) gold mining sites in regional Western Australia, and black eye parties much(prenominal) as denotationors are vitally interested in the transaction and wellness of that business. One method of analysing business performance and health is through the use of ratios. A ratio tin be defined as the relationship that exists between twain unlike qualities. In business, ratio analysis shadower be utilize to examine the relationship existing between quantities such as current assets and current liabilities or revenue and expenses. The chase newspaper will discuss whether Mia perk up the benefit if she invests in the Goldpost or she is in the disadvantage. So, let us start with debt to police force ratio. The debt to equity ratio estimates the source of funding by dissect the proprietors contribution to external finance contributions. We stooge see that the debt to equity ratio for Goldpost the mining firm that Mia is considering to bring into being an investment of $ 10 000 are considerably and continuously revolution from year 2007 to 2009.

The debt to equity ratio for Goldpost starting from year 2008 to 2009 were tangible high which constitutes about 55% and 70% compared to the industry fair(a) or industry norm which is only 45%. This indicates that they were as well reliant on bills from external sour ces rather than the owner him or herself. It! may be due to the majority of the debt was precise provided by the accounts payable, and this may have resulted in future suppliers non extending credit to Goldpost because of the perceived risk that the business could not feed to riposte the debt. The increased risk can cause or would eventually put pressure on the owners to provide additive funds of their own to the business. Besides that, it is obviously that this is exactly...If you want to get a full essay, order it on our website: OrderCustomPaper.com

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