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(1)
Ratio Analysis:
• Ratio analysis is a study of several key metrics of a company based on the data presented in its’ financial statements with an objective to evaluate the financial health of a company.
• It is essential for investors, stakeholders, government bodies etc. to evaluate the key metrics of an entity in order to ensure that the company fulfills the going concern principle and displays financial stability.
The key metrics mentioned above include the following:
• Cost of Goods sold to Total Expenses – It is a measure of the relation between the cost of goods sold in relation to the total expenses of the reporting period which include both direct and indirect costs of manufacture.
• It seeks to measure the relation of the selling and distribution expenses in relation to the total costs and a high ratio can indicate that the company is not spending enough on the Selling and Distribution expenses and vice versa.
Cost of Goods Sold to Total Expenses = Cost of Goods Sold / Total Expenses × 100
where,
Total expenses = Sum total of Direct and Indirect Expenses
Cost of Goods sold to Total Expenses for Samsung for the recent 2 years.
(2)
Ratio Analysis:
• Ratio analysis is a study of several key metrics of a company based on the data presented in its’ financial statements with an objective to evaluate the financial health of a company.
• It is essential for investors, stakeholders, government bodies etc. to evaluate the key metrics of an entity in order to ensure that the company fulfills the going concern principle and displays financial stability.
The key metrics mentioned above include the following:
• Cost of Goods sold to Total Expenses – It is a measure of the relation between the cost of goods sold in relation to the total expenses of the reporting period which include both direct and indirect costs of manufacture.
• It seeks to measure the relation of the selling and distribution expenses in relation to the total costs and a high ratio can indicate that the company is not spending enough on the Selling and Distribution expenses and vice versa.
Cost of Goods Sold to Total Expenses = Cost of Goods Sold / Total Expenses × 100
where,
Cost of Goods Sold to Total Expenses = Cost of Goods Sold / Total Expenses × 100
where,
Total expenses = Sum total of Direct and Indirect Expenses
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Chapter 20 Solutions
Fundamental Accounting Principles
- Summit Corporation started the year with total assets of $600,000 and total liabilities of $420,000. During the year, the business recorded $1,200,000 in revenues, $750,000 in expenses, and dividends of $80,000. Calculate the company's net income.arrow_forwardI need Answerarrow_forwardLarson Industries has sales of $75,000, a beginning inventory of $8,000, purchases of $40,000, and an ending inventory of $5,000. What is the cost of goods sold (COGS)? (a) $43,000 (b) $35,000 (c) $40,000 (d) $45,000arrow_forward
- financial acountingarrow_forwardWhat is the correct option? A B C D ? General accounting questionarrow_forwardSummit Electronics manufactures a single product. The company has provided the following data for its most recent month of operations: Number of units produced: 3,800 Variable costs per unit: • Direct materials: $95 Direct labor: $100 • Variable manufacturing overhead: $4 . Variable selling and administrative expense: $10 Fixed costs: • Fixed manufacturing overhead: $152,000 Fixed selling and administrative expense: $290,000 There were no beginning or ending inventories. Compute the absorption costing unit product cost.arrow_forward
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