Financial Ratio for Profitability and Solvency

Assessing financial health:
Financial statements:
12

9 3

6




The Balance Sheet - shows the financial
situation in terms of Assets &
Liabilities at a point in time

The Profit & Loss Account - shows the
financial situation in terms of
Revenues & Outflows over a
period of time


Different companies use different accounting
practices, and accounting rules vary from
one country to another

ITC M5:U7:7.2-1

, ABC Limited – Balance Sheet (in $)
ASSETS
At the end of
Item Description
200X 200Y 200Z
Fixed Assets
Investment 400 845 1,325
Plant and equipment 1,200 1,350 2,050
TOTAL 1,600 2,195 3,375
Current Assets
Stocks 1,000 1,050 1,250 Goods in stock or Inventories
Debtors 1,400 1,300 1,850 Money owed by customers, or
Accounts Receivable
Cash at bank and in hand 50 250 -
TOTAL 2,450 2,600 2,200
TOTAL ASSETS 4,050 4,795 5,775




ITC M5:U7:7.2-2