I found completing the ratio task was really enjoyable. Some questions that I have since completing the task will be outlined in my draft assignment however keen for a chat about them if you can assist.
- After restating and ratios, did anyone elses opinions of their company change? For me (having no accounting knowledge) I assumed that because my company was gaining profits each year they were wealthy… after ratios I am shocked to discover that my company is 82.70% in debt…. This ratio process identified to me that even though the company is making a profit it does not mean that it is paying out its debts.
- I am getting an insane figure in Debt/Equity Ratio… I don’t actually know why this is occurring but will definitely investigate it.
- My Earnings per Share (EPS) show up as zero however my annual report says others. Many of my shares are actually for staff so I was wondering if this would have an impact?
- My Dividends per Share (DPS) are also zero which once again concerns me and I am starting to think that I missed the start of the lecture where Maria referred to which figure to use from the Issued Share capital section.
- I was getting an interesting figure in Price Earnings Ratio so I used a * instead of / and this figure seemed more realistic, however is this correct?
At the end of the day I have learnt many things about my company especially in regards to the asset turnover and economic profit which was fascinating to watch as it evolved. But I think the thing that still shocks me the most is that my company is over 80% in debt and not using or gaining their own money.
How is your company fairing?