CONTENTS
xi
The
need for comparison
271
Calculating the ratios
273
A brief overview
275
Profitability
276
Efficiency
283
Relationship between profitability and efficiency
289
Liquidity
291
Operating cash cycle
295
Financial gearing
298
Self-assessment question
302
Summary
304
Key terms
304
Further reading
305
Critical review questions
305
Exercises
306
9 Analysing and interpreting financial statements (2)
313
Introduction
313
Learning outcomes
313
Investment ratios
314
Financial ratios and the problem of overtrading
323
Key performance indicators
324
Common-size
financial statements
325
Trend
analysis
329
Using ratios to predict financial failure
330
Limitations of ratio analysis
335
Self-assessment question
338
Summary
339
Key terms
340
References
340
Further reading
340
Critical review questions
340
Exercises
341
10 Reporting the financial results of groups of companies
348
Introduction
348
Learning outcomes
348
What is a group of companies?
349
How do groups arise?
350
Types
of group relationship
357
Preparing a group statement of financial position
359
Inter-company assets and claims
380
Goodwill arising on consolidation and asset carrying amounts
381
Preparing a group income statement
388
The statement
of comprehensive income
390
Inter-company trading
390
A01 Atrill's Financial Accounting For Decis 51257.indd 11
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xii
CONTENTS
Group statement of cash flows
390
Accounting for less than a controlling interest – associate companies
391
The argument against consolidation
394
Self-assessment question
394
Summary
396
Key terms
397
Further reading
398
Critical review questions
398
Exercises
398
11 Increasing the scope of financial reporting
406
Introduction
406
Learning outcomes
407
The development of financial reporting
407
From stewardship to decision making
408
Segmental financial reports
409
Summary financial statements
413
Interim financial statements
416
The value added statement
420
Inflation accounting and reporting
428
Self-assessment question
437
Summary
438
Key terms
439
References
439
Further reading
439
Critical review questions
440
Exercises
440
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