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Interest coverage ratio (or debt service ratio)
Meaning: this ratio establishes a relationship among net profits before interest and taxes and interest on long debt.
Objective: the objective of computing this ratio is to calculate the debt servicing capacity of a firm so far as fixed interest on long term debt is concerned.
Components: there are two component by dividing the net profits before interest and taxes by interest on long term debt. This ratio is usually expressed as x number of times. In the form of a formula this ratio may be expressed.
Market value There is universal agreement that in competitive markets a market value based transfer price should achieve optimal results. In this circumstance, it can be expected
advantages of vertical balance sheet \
JIT purchasing On the other hand is a purchasing system in which material purchased are contracted so as that the receipt and usage of materials to the maximum extent possible,
Carrying costs of inventory These are costs incurred because the firm has decided to maintain inventories. They generally consist of: • Stock-out costs • Insurance co
Proprietary ratio/ equity ratio Meaning: the ratio measures a relationship among proprietor's funds and the total assets. Objective: the objective of computing this ra
The significant objectives of short-term cash forecast are as given: find out operating cash requirement anticipating short term financing Organization investment of
meaning of group replacement policy
LIMITATIONS OF ABC ANALYSIS However ABC analysis is a basic tool for exercising selective control over many inventory items, it does not, in its current form, allow precise con
Parameter prediction error: This is another aspect of faulty planning. As Hongren says, ‘planning decisions are based on predictions of future costs, future selling price, fut
Explain the Cost accounting: Meaning and definition: Cost accounting is the process of accounting for cost which begins with the incurrence of cost and ends with th
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