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ASDA Balance Sheet Analysis

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BALANCE SHEETS As explained above, the balance sheets show the shareholders three major things: • Assets (These are things that are owned by ASDA) - Materials that an entity has acquired or purchased, and that has money value (its cost, book value, market value, or residual value). An asset can be physical, such as cash, machinery, inventory, land and building. Assets shown on their ASDA’s balance sheet are usually classified according to the ease with which they can be converted into cash. • Fixed assets are owned by ASDA and are expected to be retained for a year or more, things like buildings, trucks and delivery buses or lands. • Current assets are those that can be converted into cash easily. These assets are retained for a short time. …show more content…

• Equity (Capital) (This is the money invested in the business) - On a balance sheet, equity represents funds contributed by the owners of ASDA plus retained incomes or minus the gathered losses. The balance sheet gives the shareholder an idea of what ASDA is worth and also the assets of ASDA. A balance sheet must balance. Public limited companies must publish balance sheets and by looking at the data contained within them it is possible to value a business and estimate the net worth of a company. BASIC RATIOS - This is a very important technique of financial analysis in which measures and financial progress are converted into ratios for meaningful comparisons, with past ratios of ASDA’s financial progress and ratios of other firms in the same or different industries. Ratios are used to compare over time to see if there are any trends and also compared between businesses within the same industry (competitor). The three main things ratios are used for are: • Solvency • Profitability • Determining …show more content…

The acid test ratio is therefore 2.25. This test shows the assets compared to liabilities, like current ratio, but by taking out the stock figure from the current assets, it shows how well a business can meet its liabilities without having to sell stock. Profitability Basic ratios can also show how profitable a business really is, either just for a short period or over a long term. There are three ways of working out how profitable a business rally is: • Gross profit percentage • Net profit percentage • Return on capital employed GROSS PROFIT PERCENTAGE - (GPP) is a ratio that can be taken from ASDA’s income statement (which is a financial statement that measures ASDA’s financial routine over a specific accounting period) and the gross profit percentage reveals the profit left over from ASDA’s operations after all overhead costs have been taken away from the revenues. This calculation shows gross profit as percentage of the turnover (the income ASDA

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