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David Alexander, University of Birmingham Anne Britton, Leeds Metropolitan University Ann Jorissen, University of Antwerp, Belgium ISBN-13: 9781844802012 eISBN-13: 9781844808458 ISBN: 1844802019 eISBN: 1844808459 MARC Record [.mrc format] This third edition is designed to meet the rapidly emerging demand for coverage of new international financial reporting standards (IFRS) and the globalisation of accounting in advanced courses. The book is based on an IASB framework but the European directives, especially as regards detailed formats having no direct equivalent in IFRS, are discussed in detail. The European context and, in the case of important markets, the national context is recognised and contrasted with the international approach. Important non-European influences, especially those from the US, are included in order to provide a genuinely wide-ranging appreciation of the implications of accounting internationalism. Part 1 - Fra...

International Financial Reporting and Analysis Author: David Alexander , Ann Jorissen , Anne Britton Editor : Thomson Learning eISBN13: 9781844808458 No of pages : 912 Publish Date : 15 May 2007 Ebook/echapter Price: £33.99 Overview : This third edition is designed to meet the rapidly emerging demand for coverage of new international financial reporting standards (IFRS) and the globalisation of accounting in advanced courses. The book is based on an IASB framework but the European directives, especially as regards detailed formats having no direct equivalent in IFRS, are discussed in detail. The European context and, in the case of important markets, the national context is recognised and contrasted with the international approach. Important non-European influences, especially those from the US, are included in order to provide a genuinely wide-ranging appreciation of the implications of accounting internationalism. Part 1 - Framework, Theory and Regulation - contains covera...

International Financial Reporting and Analysis Author: David Alexander , Ann Jorissen , Anne Britton Editor : Thomson Learning eISBN13: 9781844808458 No of pages : 912 Publish Date : 15 May 2007 Ebook/echapter Price: £33.99 Overview : This third edition is designed to meet the rapidly emerging demand for coverage of new international financial reporting standards (IFRS) and the globalisation of accounting in advanced courses. The book is based on an IASB framework but the European directives, especially as regards detailed formats having no direct equivalent in IFRS, are discussed in detail. The European context and, in the case of important markets, the national context is recognised and contrasted with the international approach. Important non-European influences, especially those from the US, are included in order to provide a genuinely wide-ranging appreciation of the implications of accounting internationalism. Part 1 - Framework, Theory and Regulation - contains covera...

Return on Capital Employed Revisited There is a ratio analysis approach called the du Pont Technique or the Pyramid of Ratios Technique. We are not going to look at the whole pyramid technique and there is nothing new in it in terms of the ratios we might use; but it does contain an interesting feature. Here are the top two levels of the pyramid ROCE is called the Primary Ratio because it is at the top of this pyramid. Moreover, every ratio in this pyramid feeds up into this primary ratio, along these lines: ROCE = Profit for the year margin x Capital Employed Turnover These relationships are very useful and we can see this better when we write the formulae out in full: Return on Capital Employed (ROCE) = Profit for the Year * 100 Equity Shareholders' Funds and ROCE = Profit for the Year Margin = Profit for the Year * Capital Employed Turnover = Turnover Turnover Equity Shareholders' Funds Notice how we use the name capital employed for the eq...

The Return on Total Assets Ratio (ROTA) has a similar meaning to ROCE and the method of calculating it is the same, too. Let's work on ROTA with the Carphone Warehouse's figures: Return on Total Assets (ROTA) = PBIT * 100 Total Assets Notice that we use a different profit figure for this ratio - we use profit before interest and tax this time. This is because we try to match the profit we use with the total assets that operating managers use. Accountants would say that interest payments and tax payments are separate from the ways in which the total assets are used. That is, if we are trying to measure the efficiency of our total assets, then take the profit that they have generated before interest and taxation. Interest and tax problems are the senior managers' concern, since they decide how much to borrow and therefore how much interest they ought to pay; senior managers decide on capital investment, too, and they have a big say in how much tax they pay fo...

First some basic Rate of Return equations: Return on Capital Employed (ROCE) = Profit for the Year * 100 Equity Shareholders' Funds Return on Total Assets (ROTA) = PBIT * 100 Total Assets The rate of return ratios are thought to be the most important ratios by some accountants and analysts. One reason why the rate of return ratios are so important is that they are the ratios that we use to tell if the managing director is doing their job properly. Source: http://www.bized.co.uk/

Here are the sales and profit data for the Carphone Warehouse, mobile communications company, for the latest two years. What we want to know is whether the Carphone Warehouse is a profitable company ... and how do we know? Following the Profit and Loss Account for the Carphone Warehouse, below is the profitability section of our ratio table and we have included the name of the ratio, the formula and the workings for the year ended 31 March 2001. Carphone Warehouse Consolidated Profit and Loss Account 31 March 2001 25 March 2000 for the year ended £'000 £'000 Turnover 1,110,678 697,720 Cost of sales -830,126 -505,738 Gross profit 280,552 191,982 Operating expenses -176,960 -129,359 Operating profit 66,016 41,389 Other costs/income -21,004 -16,089 Profit before interest and taxation 45,012 25,300 Net interest receivable (payable) 2,385 -196 Profit on ordinary activities before taxation 47,397 25,104 Tax on profit on ordinary activities -8,675 -8,831 Profit on o...

Here is part of the profit and loss account for Marks & Spencer for two years. Compare these results by calculating the ratios named below and discuss what you find. Gross profit margin Operating profit margin Consolidated profit and loss for the year Marks & Spencer plc 2002 2001 £m £m Turnover 8,135.4 8,075.7 Cost of sales -6,862.5 -7,154.3 Gross profit 1,272.9 921.4 Operating expenses -629.1 -480.9 Operating profit 643.8 440.5 Additional notes are available on advanced profitability or you can move on to the Rate of Return section. Profitability - Additional Question 2 J Sainsbury plc has published the following two years' worth of turnover and profit information. Calculate the following ratios and make comments on what you find. Gross profit margin Operating profit margin Net profit before interest and taxation margin Consolidated profit and loss account J Sainsbury plc for the year ended 30-Mar-02 30-Mar-01 £m £m Turnover 17,162 17,244 Cost...

Activity 3 - Vodafone profit margin Use the database in this section of this site to find the data you need to calculate the gross and net profit margins for Vodafone plc ... be ready, there are some losses to deal with here. You use this table to enter your results. Vodafone plc Profitability 31 Mar 2002 31 Mar 2001 Gross Profit Margin Net Profit Margin Did you get this ? Let's discuss what these results mean. Firstly, Vodafone has, compared to the Carphone Warehouse, an apparently healthy gross profit margin: Vodafone's gross profit margin is around 40% compared to the Carphone Warehouse's gross profit margin of around 25%. However, look at the net profit margin: something strange is happening to Vodafone because it has made a net loss for both of the two years. Take a look at Vodafone in the database for more information on what might have gone wrong. Vodafone's operating expenses have increased by £8 billion over the year whilst turnover ha...