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Profitability ratios
The primary objective of a business under taking is to earn profits. Profit earning is considered necessary for the survival of the business. A business requires profit not only for its existence but also for diversification and expansion. Profits are thus a useful measure of overall efficiency of a business. profits to the management are the test of effectiveness and a measurement of control: to owners a measure of worth of their investment a measure of tax paying capacity and the basis of legislative action to customers source of finance for growth and existence and finally to the country profits are an index of economic progress profitability ratios are calculation to measure the overall efficiency of the business.
Transfer pricing sometimes entails using different transfer pricing systems: one for tax purposes, and one for internal decision making, even though maintaining two systems can be
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Discuss arguably how management accountants should decide when are faced with the extra shift decision
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Describe the Limitations of management accounting: 1. Based on accounting information: the correctness and effectiveness of managerial decisions will depend upon the quality
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