6 limitations of using accounting ratios in appraising financial performance.

Accounting ratio are used to measure the efficiency and profitability of the company based on its financial reports. They provide a way of expressing relationship between one accounting data point to another, and are the basis of ratio analysis.



The following are limitation of accounting ratios in appraising financial performance:

  • Inconsistent definition of ratios
  • Financial
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Management accounting revision question on zero based budgeting based on ACCA & DRURY

You are the management account of group of companies and your managing director has asked you to explore the possibilities of introducing a zero based system experimentally in one of the operating companies in place of its existing orthodox system.
REQUIRED:
    1. Explain how zero-base budgeting would work within the company chosen
    2. What advantages it might offer over the existing system?
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