3. INTRODUCTION:
THE TERM MANAGEMENT
ACCOUNTING IS ONE OF
RECENT ORIGIN. THIS TERM
WAS FIRST USED IN 1950
BY THE TEAM OF
ACCOUNTANTS VISITING U.S.A
UNDER THE AUSPICES OF
ANGLO-AMERCIAN COUNCILE
ON PRODUCTIVITY.
7. ACCORDING TO CHARTED
ACCOUNTANTS OF ENGLAND:
“ANY FORM OF ACCOUNTING
WHICH ENABLES A
BUSINESS TO BE
CONDUCTED MORE
EFFICIENTLY CAN BE
REGARDED AS MANAGEMENT
ACCOUNTING”
8. ACCOURDING TO ICAI:
“MANAGEMENT ACCOUNTING
IS A SYSTEM OF COLLECTING
AND PRESENTATION OF
RELEVANT ECONOMIC
INFORMATION RELATING TO
AN ENTERPRISE FOR
PLANNING, CONTROLLING
AND DECISION MAKING”
28. RATIO
ANALYSIS:
Ratio analysis refers to the analysis and
interpretation of the figures appearing
in the financial statements (i.e., Profit
and Loss Account, Balance Sheet and
Fund Flow statement etc.).
It is a process of comparison of one
figure against another. It enables the
users like shareholders, investors,
creditors, Government, and analysts
etc. to get better understanding of
financial statements
30. (A) MANAGERIAL USE of RATIO
ANALYSIS:
1. HELPFUL in DECISION MAKING
2. HELPS in FINANCIAL
FORCASTING and PLANNING
3. HELPS in COMMUNICATING
4. HELPS in CO-ORDINATION
5. HELPS in CONTROL
6. OTHER USES
31. (B) UTILITY to SHARE
HOLDERS/ INVESTORS
(C) UTILITY to CREDITORS
(D) UTILITY to EMPLOYEES
(E) UTILITY to
GOVERNMENT
(F) UTILITY to TAX AUDIT
REQUIREMENT
33. 1. LIMITED USE of a SINGLE
RATIO
2. LACK of ADEQUATE
STANDARDS
3. INHERENT LIMITATIONS OF
ACCOUNTING
4. CHANGE OF ACCOUTING
PROCEDURE
5. WINDOW DRESSING
34. 6. PERSONAL BIAS
7. UNCOMPARABLE
8. ABSOLUTE FIGHRES
DISTORIVE
9. PRICE LEVEL CHANGES
10. RATIOS NO SUBSTITUTES
11.CLUES NOT CONCLUTIONS
40. THE BRITISH INSTITUTE OF
MANAGEMENT has RECOMMENDED the
CLASSIFICATION of RATIOS according to
importance or significance,
These ratios are classified in two types
1.PRIMARY RATIOS
a) RETURN ON CAPITAL EMPLOYEED
2. SESCONDARY RATIOS: the other ratios
are which support or explain the primary
ratios called SECONDARY RATIOS
Eg: the relationship of operating profit to
sales or
The relationship of SALES to TOTAL
ASSETS