In this lecture we will look at Interpretation of Financial Statements
Financial statements are prepared to assist users in making decisions. They therefore need
interpreting, and the calculation of various ratios makes it easier to compare the state of a company
with previous years and with other companies.
We will look at Interpretation of Financial Statements and the various ratios that you should learn. We will work through an example to illustrate the various ratios.
View ACCA F3 / FIA FFA lectures Download F3 notes
do i have to remember all the formula or will it be given?
You have to remember them – they are not given.
hi Sir ,
what is mean by Debt ratio ?
Know *
Debt ratio is another name for the gearing ratio.
The ratios you need to know are covered in our note and lectures.
Ok… thank you
You are welcome 馃檪
can u tell me what more subject lectures are available of urs?
If you mean Paper F3 topics, then go to the main F3 page and you will find a link to all of the lectures (and to the free Course Notes that are used in the lectures).
I mean of papers not topics!
We have lectures and notes for all of the ACCA papers.
If you look at the home page and choose the ACCA link, then you will find links to them.
He/She is trying to ask what are the papers that you teach
hi john, i read Examiner鈥檚 report
F3/FFA Financial Accounting
June 2012
Extracts from the financial statements of Miller Co are shown below:
31 May 2012
$000
Revenue 475
Cost of sales (342)
Gross profit 133
Expenses (59)
Finance cost (26)
Profit before tax 48
What is the interest cover ratio for the year ended 31 May 2012?
A 2.85
B 1.85
C 5.12
The answer is:
Profit before interest and tax (133-59) = 2.85 (Answer option A)
Finance cost 26
can you explane me? I couldn’t understand..
Nita, this is probably too late for you now, but you should ask questions like this in the Ask the Tutor forum.
It is not possible for us to read every comment under every lecture!
Interest cover is profit before interest and tax divided by the interest.
The profit before interest and tax is 133-59 = 74
The interest (finance cost) is 26.
So the interest cover is 74/26 = 2.85
how to browse try another browse?
Hi, what type of ratio is the Debt Ratio? and what exactly is the Debt ratio measuring.
you are great sir… you are awsome.. but i want to ask u something irrelevent to lecture.. but important and that is only the females students (e.g leega.. areena etc.) in ur live lecture class… no boy… why ??? haha..
There are boys – they just do not say as much as the females 馃檪
how can i attend ur live lectures? r u like teaching in some sort of colleges ?
I have read in a text book the formula for Asset turnover as revenue/total assets. Is this correct? It gives me a different answer.
For asset turnover look at revenue / (total assets – current liabilities), which is the same as revenue / (share capital + non-current liabilities).
An alternative is to look at the fixed asset turnover (or non-current asset turnover), which is revenue / non-current assets.
It depends what the question asks for – if they want asset turnover then it is as per the first sentence of this reply (and as per the course notes)
I don’t understand why you use PBIT in calculating Net Profit Margin ?PBIT is similar to Operating Profit, so it seems like you calculate Operating Profit Margin. Also Net Profit is profit available for shareholders and PBIT is not fully available for shareholders. Maybe its because of syllabus of ACCA, please, could you explain?
Although for financial accounts, the net profit is the profit available for shareholders, here we are trying to measure how well the business is being run. So for these purposes , we treat net profit as being the net operating profit (before tax and interest). The tax depends on the state policy and the interest depends on how the company is financed. It is the net operating profit that measures how well the managers are running the business.
please work on your server … the videos are not responding .
Videos work/ load fine
Try another browser
@admin, thank you … plus would it be possible for you guys to have special videos that peopl could download especialy for those who dont have access to internet all the time .
The addition of 5255 plus 1200 is 6455 therefore the ROCE is 1869/6455 is 28.95%.
Transposition error on my calculation.
oh …its not downloadable !!!!!!!!!
it’s too much helpful.how can i download these lectures…..
u may try safari browser!!! 馃槈
The lectures are not downloadable and can only be watched online. It is the only way that we can keep this website free of charge.
Using Safari will not make them downloadable!!!! 馃檪
but today when i tried to stream ur lecture by safari browser it downloaded it!!! 馃榾
BTW sir john i like the way u teach!!! 馃檪
Very gd Thank u very much Opentution