The operating profit percentage can be calculated using the following formula, with figures taken from your income statement: This ratio is designed to give you…

Return on assets is the ratio of net income to total assets. It is basically a measure of how well your business is using its…

The return on equity ratio can be calculated using the following formula: The ratio of net income (from the income statement) to net worth or…

We first classify costs according to the three elements of cost: materials labour expenses

Management accounting systems help to decide who has the decision-making authority over company assets. Accounting information produced or created from the management accounting system supports…

We also classify costs as either Product costs: the costs of manufacturing our products; or Period costs: these are the costs other than product costs…

Direct costs Direct costs are generally seen to be variable costs and they are called direct costs because they are directly associated with manufacturing. A…

Businesses often face the need to spend large amounts of money on assets that will be functional for many years. Here are a few examples:…

Investment in fixed assets is generally undertaken because of the need to produce and sell goods or services in the future. It is a commitment…

Capital expenditure is an expenditure on long-lived assets, also referred to as fixed assets or non-current physical assets. The term capital investment is sometimes used…