|
3) Some other common ratios are given below. Match the ratios with the formulas (1-7) and the descriptions (a-g).
gross profit margin • earnings per share • return on equity • average interest rate • debt/equity ratio
• inventory turnover • price/earnings ratio
|
1. interest expenses
liabilities - accounts payable
2. net income - dividends on preferred stock
average shares
3. net income
shareholder's equity
4. total liabilities
shareholder's equity
|
5. revenue-cost of goods sold
revenue
6. cost of goods sold
average inventory
7. market value per share
earnings per share
|
a) Gives the company's pricing policy and mark-up margins. An adequate gross margin allows a company to pay its expenses, and then expand.
b) Determines the average interest rate at which a company borrows funds.
c) Compares the current market price with earnings to calculate if a stock is over or under valued. Used as a prediction or expectation of future performance.
d) Indicates the return a company gets on the owners' investment. Companies that make high returns often do not require more debt investments.
e) Shows the turnover of inventory, and can be compared against sales figures, to show the demand for the company's products.
f) indicates what proportion of equity and debt an enterprise uses to finance its assets. More stringent test is to use just the long-term debt.
g) Calculates the profit made on a per-share basis. This is quoted by U.S. publicly held companies in their financial statements.
4) Use words from the descriptions above to complete the table. The first one is done for you.
|
VERB
to predict
to____________ 1
to____________ 2
to____________ 3
to expect
to____________ 5
to____________ 6
to perform
|
NOUN
prediction
payment
comparison
calculation
__________4
indication
expansion __________7
|
Now use verbs or nouns from above to complete the sentences. You may need to change the form.
a The figures are a little different to what we were____________.
b The problems in the Middle East have made it really difficult to____________next year's turnover.
c I think there are some mistakes in the____________.
d The fund____________much better last year. This year has been very disappointing.
e The____________into Eastern Europe looks good.
f We need to make sure that our customers____________us on time.
5) Here are some phrases the accountant used during the meeting in exercise 2. Can you fill in the missing words?
questions • just • that • got • over • ask
1. Norma has asked me to go__________some of the ratios I used in the report.
2. Everyone__________it?
3. Before you__________...
4. Is___________clear?
5. I was__________coming to that.
6. OK, if there are no__________, I'd like to ...
Source: "English for Accounting Student's Book with MultiROM" by Maloney, Sean & Frendo, Evan
| 
