There are a number of ratios that can be used to analyze how well (or badly) your business performs in certain areas. For example, lets look at the Current Ratio:
CURRENT RATIO (is) CURRENT ASSETS (divided by) CURRENT LIABILITIES
CURRENT ASSETS are: debtors, stock, cash
CURRENT LIABILITIES are: creditors, overdraft, loan repayments for 12 months (see Balance Sheet for more information on assets and liabilities)
Say, current assets = £300k and current liabilities = £200k, the current ratio would be 1.5. as 300 divided by 200 is 1.5. A business should aim for a figure ideally between 1.5 and 2.0.
A figure that falls significantly below this range suggests that the business is in danger of running out of cash, whereas a figure significantly higher than this range suggests that money is tied up in unproductive assets.
For a business to be successful, it is important that you understand which statistics reflect good and bad performance so that corrective action can be taken immediately. For further details highlighting the main ratios used to measure business performance, visit the following page: Credit Reports. These ratios include 'Debt to Equity', 'Profit to Sales', 'Return on Capital Employed', and more.
BizHelp24 – UK business and finance information, news, help and services for small businesses BizHelp24 is a UK business and finance resource providing Small Business Help, Start up Information, news and services; for individuals and Sole Traders. Comprehensively covering a wide range of key business, finance, and service topics. Employment and personal information includes Work Times and Break Entitlement, Body Language, employee Holiday Entitlement and Employment Contracts. Credit Policy information includes Letter of Credit, useful Credit Notes, Business Loans. and Cash Flow Control. Other information areas include Bankruptcy, Homeworking, Business Failure, Company House and Company Names,
The free content within this entire web site is for information only.
The content is believed to be accurate, but only in general terms. Specific advice is needed for individuals & businesses.
ROK Connect Limited (Registered in England No.3573320) t/a
Biz Help 24 is registered with the
Data Protection Act 1998 No.PZ7082780
