This document provides an introduction to management accounting and ratio analysis. It defines management accounting as accounting information that is useful for management decision making. It also defines ratio analysis as the process of comparing financial statement figures to better understand the financial position of a company. Ratio analysis can help managers with planning, controlling performance, and decision making. Some key ratios mentioned include return on capital employed and relationships between operating profit and sales or sales and total assets. The document also discusses types and limitations of ratio analysis.

1. III B.com
MANAGEMEN
T
ACCOUNTING

2. SYLLABUS:

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.

4. INTRODUCTION:

5. DEFINITIONS
OF
MANAGEMENT
ACCOUNTING

6. ACCOURDING TO
R.N.ANTHONY:
“MANAGEMENT
ACCOUNTING IS
CONCERNED WITH
ACCOUNTING
INFORMATION THAT IS
USEFUL TO MANAGEMENT”

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”

9. Need or
Importance or
Advantages of
MANAGEMENT
ACCOUNTING:

10. INCREARS EFFICIENCY
PROPER PLANNING
MEASERMENT OF
PERFORMANCE
MAXIMISING PROFITABILITY
IMPROVE SERVICE TO
CUSTOMERS
EFFECTIVE MANAGEMENT
CONTROL

11. OBJECTIVES
of
MANAGEMENT
ACCOUNTING:

12. PLANNING & POLICY
FORMULATION
HELPFUL IN
CONTROLLING
PERFORMANCE
HELPFUL IN
ORGANISING

13. HELPFUL IN
INTERPRETING
FINANCIAL STATEMENTS
MOTIVATING
EMPLOYEES
HELPFUL IN MAKING
DECISIONS

14. REPORTING TO
MANAGEMENT
HELPFUL IN CO-
OPERATION
HELPFUL IN TAX
ADMINISTRATION

15. LIMITATIONS
Of
MANAGEMENT
ACCOUNTING:

16. BASED ON ACCOUNTING
INFORMATION
LACK OF KNOWLEDGE
INTUTIVE DECISIONS
NOT AN ALTERNATIVE TO
ADMINISTRATION

17. TOP HEAVY
STRUCTURE
EVOLUTIONARY STAGE
PERSONAL BIAS
PSYSCHOLOGICAL
RESISTANCE

18. DIFFERENCE
BETWEEN
FINANCIAL
ACCOUTING
And MANAGEMENT
ACCOUNTING

19. OBJECT
NATURE
SUBJECT MATTER
LEGAL COMPULSION
PRECISION

20. REPORTING
DESCRIPTION
QUICKNESS
ACCOUNTING
PRINCIPLES

21. PERIOD
PUBLICATION
AUDIT

25. UNIT-II
RATIO
ANANLYSIS

26. INTRODUCTION:
RATIO ANALYSIS IS
ONE TOOL OF
MANAGEMENT
ACCOUNTING
in FINANCIAL
STATEMENT
ANALYSIS.

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

29. or
SIGNIFICANCE
or
ADVANTAGES
of

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

32. DISADVANTA
GES or
LIMITATIONS
of
RATIO

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

35. TYPES or
CLASSIFICTI
ON
of
RATIOS

39. CLASSIFICATION
of RATIOS
ACCOURDING to
SIGNIFICANCE or
IMPORTANCE:

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

41. UNIT-3
FUND
FLOW
STATEMENT