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HOw does its management affetcs.

• Many people inside/outside a company want to know if the company is performing well, and compare it to other years as well as to other companies.

There are two forms of doing this:



To understand these terms, there is need to verify each meaning:
 Net profit Before tax is found on the Profit and Loss Account, it is calculated by:


=



Profit before tax Revenue (Minus) All costs



 Net Assets employed is found on the balance sheet us calculated by:



=


Net assets employed Total assets (Minus) Total Liabilities


By knowing this the formula is then used: The percentage shows how well the management of the business have used the assets employed in the business to generate money, this is compare with other years and companies, to see their progress. If the % is larger th...

Posted by: Angelia Holliday

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