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YOGESH KUMAWAT, FACULTY , MJRP UNIVERSITY, PHD, MBA- MKTG, PGDBM- FINANCE, LLB, BCOM

Management Accounting
In management accounting, accounting information after analyzing and interpreting by objectives is presented to the management so as to assist in the execution of determination of policies, planning, decision-making and co-ordinating functions. According to RN Anthony, Management Accounting is concerned with accounting information that is useful to management. According to Institute of Chartered Accountants, England, Any form of accounting which enables a business to be conducted more efficiently can be regarded as Management Accounting. According to TG Rose, Management Accounting is the adaptation and analysis of accounting information and its diagnosis and explanation in such a way as to assist management. Objective or Utility of Management Accounting 1. 2. 3. 4. 5. 6. 7. 8. 9. To help in planning and policy making To help in organization To help in decision making To help in controlling To help in coordinating To help in communication Helpful in reporting To assure responsibility To help in motivation

1. To help in planning and policy making- Planning involves setting of goals, formulation of policies, and determination of future plans. On the basis of data obtained from financial accountants, policies regarding production, sale, finance and marketing, are formulated. Determination of alternative course of action and initiation of necessary programmes to achieve and attain the required goal, is also a part of planning. 2. To help in organization- Organisation is an important process of administration. It is a vital means of attaining specified objectives and performance of its policies. As is evident from the definitions given above, organization includes the presentation of accounting information and data to the management in such a manner that management can obtain them at the right time in the right manner. 3. To help in decision making- In management accounting different plants are formulated with regard to purchases, sales, finance and production. On the basis of comparative study of information and the data, different alternatives of management decisions are studied and the most profitable one of them is selected.

YOGESH KUMAWAT, FACULTY , MJRP UNIVERSITY, PHD, MBA- MKTG, PGDBM- FINANCE, LLB, BCOM 4. To help in controlling- One of the main object of management accounting is to direct all efforts towards the attainment of goals by means of comparison and effective control of various attainments with the pre-determined goals. The variation between the two are ascertained and set right immediately. 5. To help in coordination- The aim of management accounting is to help the management in coordinating different activities of the firm. With the help of budgeting, activities of different departments are coordinated. Purchase and production budgets along with financial and sales budgets are also coordinated in such a manner that there is no hurdle in performing various activities of the firm. It also involves the coordination work between financial accounting and cost accounting. 6. To help in communication- It is also one of the objectives of management accounting to help the management to provide upto date information about the latest financial position of the firm. It will facilitate the management to take prompt and timely decisions. The evaluation of various departments is also communicated regularly to the top management. It is performed with the help of interim reports and other statements. 7. Helpful in reporting- The most important task of management accounting is to make available necessary data and other material for different levels of management for decision making. This function is discharged with the help of reports. Heads of different departments also communicate the performance report to top management with the help of reports. The management accounting plays a vital role in this regard. 8. To Assure responsibility- It is also the objective of management accounting to fix the responsibility of reporting process. For this purpose various responsibility centers are established for attaining particular targets and objectives so that each and every person in the organization is made interested. 9. To help in motivation- With the help of management accounting, the work of all employees determined in such a manner that every one in the organization gets the work of his choice and interest.

Scope of Management Accounting 1. Financial Accounting 2. Cost Accounting 3. Budgeting and Forecasting 4. Cost control techniques 5. Interpretation of financial data 6. Statistical Methods 7. Tax Accounting 8. Reporting 9. Office Services 10. Internal Auditing

YOGESH KUMAWAT, FACULTY , MJRP UNIVERSITY, PHD, MBA- MKTG, PGDBM- FINANCE, LLB, BCOM 1. Financial Accounting- Financial accounting is the general accounting which relates to the recording of business transactions in the books of primary entry, posting them into respective ledger accounts, balancing them and preparing a trial balance. Then a profit and loss account showing the results of the business for the accounting period and also a balance sheet on a specified date depicting assets and liabilities of the business concern are prepared. This in turn forms the basis for analysis and interpretation for meaningful data to the management. 2. Cost Accounting- It is process and technique of ascertaining cost. Planning, decision-making and control are the basic managerial functions. Cost accounting is considered as the backbone of management accounting as it provides the tools such as standard costing, budgetary control, inventory control, marginal costing etc. for carrying out such functions effectively. 3. Budgeting and Forecasting: Budgeting means expressing the plans, policies and goals of the enterprise for a definite period in future. Forecasting, on the other hand, is a prediction of what will happen as a result of a given set of conditions. Under budgeting system, targets are set for different departments and responsibility is fixed for achieving these targets. The comparison of actual performance with budgeted data will provide an idea about the performance of the department. Thus, the operational control is exercised through budgets. 4. Cost control techniques- Cost control techniques are required to use the various factors of production in the most economical manner. This work is performed by comparing actual costs with budgeted standards, analysis of variances and reporting to the management. Various techniques of cost accounting like inventory control, budgetary control, standard costing are used for this purpose. 5. Interpretation of financial data- Analysis and interpretation of financial statements is am important part of management accounting. A person can get meaningful information and conclusions about the financial health (profitability, solvency, liquidity) of the firm with the help of analysis and interpretation of the information contained in financial statements. On the basis of it, the profitability of the business can be increased by improving its financial position. Numerous techniques have been developed which can be used for the proper interpretation and analysis of financial statements. 6. Statistical Methods- Modern managers believe that financial and economic data available for managerial decisions can be more useful when analysed with statistical and quantitative techniques. Statistical tools such as graphs, charts, diagrams, index numbers etc. make the information more impressive, comprehensive and intelligible. The techniques such as time series, regression analysis, sampling techniques are highly useful for planning and forecasting. Further, managers also use techniques like linear programming, game theory, queuing theory etc. in their decision-making process. 7. Tax Accounting- Taxation plays an important role in the profitability of a business concern. The business profit and the tax thereon is to be ascertained as per the provisions of the Income Tax Act. The preparation and filing of return of tax imposed by central, state or local government in due time and payment of tax assessed is exclusively the responsibility of the management accountant.

YOGESH KUMAWAT, FACULTY , MJRP UNIVERSITY, PHD, MBA- MKTG, PGDBM- FINANCE, LLB, BCOM 8. Reporting- Reporting within reasonable time is essential for quick and timely action. Hence, reports prepared at lower level are presented to its higher level. These reports may include financial statements, cash and funds flow, stock reports etc. The basic responsibility of management accountant is to keep the management well informed about the operations of the business. 9. Office Services- The office routine is controlled by management accountant. To discharge this responsibility efficiently, he has to deal with data processing, filing, copying and duplicating, dealing of inward and outward mails etc. Its areas of responsibility also include the evaluation and reporting about the utility of different office procedures and methods. 10. Internal Auditing- The internal audit is a discipline of management accounting. It makes arrangements for internal control by establishing internal audit coverage for all operating units. Internal audit assists the management in fixing responsibility of different individuals.

Functions of Management Accounting 1. 2. 3. 4. 5. To Assist in planning To Assist in organizing To Assist in co-ordination To Assist in control To Assist in decision-making

1. To Assist in planning- Management has to plan its future activities. For this task, management accounting provides past years comparative figures and forecasts for future relating to sales, production, cash etc. Planning also involves selection of the best among all alternatives available. Management accounting helps in this regard by providing data in terms of cost, price, income or profit to evaluate various alternatives. 2. To Assist in organizing- Organisation is related to the establishment of relationship among different individuals in the concern. It also includes delegation of authority and fixing of responsibilities. Management accounting concerns with the establishment of cost centres, preparation of budgets, preparation of cost control accounts and fixing of responsibility of different peoples. All these aspects are helpful in setting up an effective and efficient organizational framework. 3. To Assist in coordination- Management accounting provides tools which are helpful in coordinating the activities of different sections or departments. Coordination is done through functional budgets. Management accounting reports serve as a link between various departments. Coordination not only helps in accomplishing the set goals and tasks but also assists management in successfully running the business enterprise. 4. To Assist in control- Control is one of the basic function of management. Management accounting helps management in performing this function by

YOGESH KUMAWAT, FACULTY , MJRP UNIVERSITY, PHD, MBA- MKTG, PGDBM- FINANCE, LLB, BCOM directing all accounting efforts in this direction, Budgetary control, standard costing and other cost control techniques of material, labour and indirect expenses of management accounting make effective control possible. 5. To Assist in decision-making- The management has to take certain decisions for day to day functioning of the business as well as planning for the future. These decisions may be regarding seasonal or temporary stoppage of production, expansion or diversification, replacement of fixed assets, make or buy etc. Management accounting supplies analytical information in terms of costs, prices, income or profits etc. regarding various alternatives. The information provided by management accounting helps management in selecting the most profitable alternative and taking correct decision. For this purpose, the various techniques of management accounting such as marginal costing, break-even analysis, costvolume profit analysis and project appraisal etc. are used. Limitations of Management Accounting 1. 2. 3. 4. 5. 6. 7. 8. Based on Accounting Information Not an alternative to administration Lack of knowledge of related subjects Lack of objectivity Costly Installation Wide Scope Evolutionary Stage Resistance

1. Based on Accounting Information- Most of the information used in management accounting is derived from financial accounting and cost accounting and other similar records and documents. The techniques such as analysis and interpretation of financial statements, budgetary control, standard costing, costvolume-profit analysis etc. used in management accounting are based on these accounting records. Therefore, how far the decisions taken on the basis of these information are correct, depends upon the correctness and accuracy of these information. 2. Not an alternative to administration- Management accounting presents duly analysed and interpreted information before the top management. It also suggests the best possible alternatives to management, but ultimate decisions and corrective steps are being taken by the management, and not by management accountant. Management accounting, therefore, is not an alternative to management. It is only a tool to assist the management which provides information for various decisions. 3. Lack of knowledge of related subjects- Management accounting is related to other subjects, such as economics, statistics, management, econometrics, engineering etc. Moreover, it has evolved on account of the development of these subjects. The full benefits of management accounting can only be derived when

YOGESH KUMAWAT, FACULTY , MJRP UNIVERSITY, PHD, MBA- MKTG, PGDBM- FINANCE, LLB, BCOM management accounting is fully acquinted with all these related subjects. But, today in the age of specialization, it seems very difficult to posses knowledge of all such subjects by a single person. Lack of objectivity- The information presented to management are affected by personal judgement of the person who presents, analyses and interprets such information. Thus, management accounting is absolutely subjective. The decisions taken by management accountant are affected by his personal prejudices, views and opinions which sometimes bring adverse results to the firm. Therefore, the success of management accounting depends upon the understanding, knowledge and ability to seek cooperation of the management accountant. Costly installation- The installation of a system of management accounting in a business concern requires a very elaborate organization and a large number of manuals. This results in heavy investment and the costs of adoption of the system may outweigh its benefits. Hence, it is very costly and only the large firms can afford it. Wide scope- The scope of management accounting is wide and broad- based. This creates many difficulties in the implementation process. It is easy to record, analyse and interpret an historical event converted into monetary terms in a most objective manner. But, it will be difficult to perform the same function in respect of future and unquantifiable situations in the light of past records. Evolutionary Stage- Management accounting is a new discipline and a growing subject too. It is still in the infancy stage and undergoing evolutionary process. Its conventions are not as exact and established as of other sciences. Thus, being an inexact science, its results depend to a very great extent upon the intelligent interpretation of data for managerial uses. Resistance-Installation of management accounting system involves basic changes in the pattern of working of executives workers and other personnel. The is bound to attract opposition especially from labour force misinterpreting is as a tool meant for their exploitation unless a strong resistance is put, it would be difficult to install the system.

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Tools or Techniques of Management Accounting 1. Financial planning 2. Financial Accounting and Analysis 3. Fund flow analysis 4. Cash flow analysis 5. Historical cost accounting 6. Marginal costing 7. Budget and budgetary control 8. Decision accounting 9. Control accounting 10. Standard costing

YOGESH KUMAWAT, FACULTY , MJRP UNIVERSITY, PHD, MBA- MKTG, PGDBM- FINANCE, LLB, BCOM 11. Management information system 1. Financial planning- It is the basic necessity for the success of business enterprise. It refers to the process of estimating total capital requirement and deciding about its nature and the sources of acquiring it. The following activities are included in financial planning: a) Estimation of capital requirement in total b) Determination offixed and working capital c) Determination of different sources of raising capital and capital structure d) Calculation of cost of capital to be raised through different sources e) Computation of comparative cost of raising capital through different sources and to ascertain the economical source f) Formulation of proper policies for management of capital, credit and discount policies to be followed. 2. Financial Accounting and Analysis- Financial accounting and its analysis is an important tool of management. It is an attempt to determine the importance and meaning of financial statements data so that proper forecast may be made for the prospects of future earnings, ability to discharge its short term and long term debts and the possibility of a sound dividend policy with the analysis and interpretation of these statements and the presentation of information which will help to business executives, investors and creditors etc. in their decision making. 3. Fund flow analysis- It is a technique with the help of which changes in working capital during two period of time are studied. It is an essential tool in the hands of management. By analyzing the statement of changes in financial position of a firm one can find out the items causing changes in working capital. Thus, fund flow statement is a sort of report of financial operations, changes, flows and movement of fudn or working capital. It is a supplementary statement to final accounts of a corporate body which provides those information which are not available in other statements. This statement has now been considered as a very useful technique which provides complete and adequate information about how activities were financed, how financial resources were collected and applied during a particular period and how the liquid position was affected. 4. Cash flow analysis- In fund flow statement cash as well as other components of working capital are considered while under cash flow statement we study only about the changes in cash position of the firm between two Balance Sheet dates. A cash flow statement is a statement that highlights upon the causes which brings changes in cash position of a business enterprise between two balance sheet dates. It helps the management in planning, coordinating, controlling the cash for formulating a financial plan. It provides a clear picture of cash inflows and outflows from operating, financing and investing activities of a business. 5. Historical cost accounting- The system of recording actual cost data after it has been incurred is called historical cost accounting. There are two basic methods of cost ascertainments; a) Job costing b) Process costing. These methods are essential to operate as another tool of management accounting i.e. standard costing. 6. Marginal Costing- It is a technique which deals with the principle of treating the cost of producing marginal unit. Thus it is concerned with the finding out

YOGESH KUMAWAT, FACULTY , MJRP UNIVERSITY, PHD, MBA- MKTG, PGDBM- FINANCE, LLB, BCOM marginal cost by segregating fixed cost and variable cost. It also studies the profitability at various levels of output. This technique deals with the ascertainment by means of differentiating between fixed and variable costs, of marginal costs and the effect on profit of the changes in volume of output. It is an important device in the hands of management to take variety of different decisions. 7. Budget and Budgetary control- The budgetary control is an essential tool of the management for controlling cost and maximizing the profits. It is a technique which enables to reduce cost, prevent wastage and maximize profits of a business enterprise. Its keynotes are planning, coordination and control. In other words, under this technique various factors of production are combined in the most profitable manner. It needs careful working out plans in advance for all divisions of a manufacturing unit, its proper implementation, comparison and finding out reasons of differences between pre-determined or anticipated and the actual results. It is a technique and modern tool of managerial control through preparation of various budgets. 8. Decision Accounting- It is the main function of top management. It is a process involving an integrated application of different accounting tools, for example, marginal costing, differential costing, Break-even-point analysis, CVP analysis etc. Decision on capital expenditure, whether to make or buy, what price is to be charged, expansion or contraction etc. are taken after studying the alternative data in terms of costs, price, and profits furnished by management accounting and exercising the best choice after considering non-financial factors. 9. Control Accounting- Control accounting is not a separate accounting system. Different systems have their control devices and these are used in control accounting. It consists of techniques of standard costing, budgetary control, control reports and statements, internal check, internal audit and reports etc. it is this field that the management can display its ingenuity in the analysis, interpretation and presentation at all levels of management. 10. Standard Costing- It is a technique of cost control whereby standards costs of job or a process or a unit or output is predetermined and subsequently compared with actual costs to find out the differences between the two. In other words, standard costing is a technique of cost accounting which compares the standard cost of a job or product or services rendered with the actual cost to determine efficiency of the operations so that remedial

YOGESH KUMAWAT, FACULTY , MJRP UNIVERSITY, PHD, MBA- MKTG, PGDBM- FINANCE, LLB, BCOM RATIO ANALYSIS Defination- A ratio is a simple arithmetical expression of the relationship of one item to another. Objective or Significance of Ratio Analysis 1. To measure profitability- There are many such ratios with help of which profitability of the business is ascertained, for example gross profit ratio, operating ratio, return on capital employed ratio etc. 2. To have knowledge of liquidity- To meet the obligations of the company, it is necessary that some part of assets is liquid. The liquidity ratios are calculated for this purpose. For example- current ratio, liquid ratio etc. 3. To portray solvency- The solvency is of two types, one short term and the second, long term. Short term solvency depends upon the liquidity of the business whereas for long term solvency proprietory ratio, debt equity ratio, solvency ratio etc. 4. To ascertain operational efficiency- To measure operational efficiency of a business, turnover ratios are calculated. 5. To facilitate comparison- Ratio analysis is helpful for comparing efficiency of a various firms of an industry, called inter firm comparison. It also facilities intra firm comparison that is comparison among various departments in the firm or comparison of efficiency for a number years of the same firm. 6. To measure industrial sickness- Now a days the position of industrial sickness is very severe. There are many ratios which have been evolved which can throw light on industrial sickness and which work as a thermo meter to measure sickness of an industry. 7. To reflect productivity- It is possible to find out productivity of various sources deployed in business with the help of ratio analysis.

Limitations of Ratios 1. Confusive conclusions- Ratios may represent relative positions and they can not be substituted with actual data. For example, if current ratio of firm A is 2:1 with Rs. 4000 and Rs 2000 current assets and current liabilities, is compared with firm B having CA= Rs. 40000 and CL= Rs 20000. The current ratio in both the cases

YOGESH KUMAWAT, FACULTY , MJRP UNIVERSITY, PHD, MBA- MKTG, PGDBM- FINANCE, LLB, BCOM is the same 2:1 but we can not ascertain the size of the firm by studying the current ratios of both the firms. 2. Lack of well defined formula- For calculating various ratios terminology used is not uniformly defined e.g. capital of shareholders, total capital employed, some firms may take profit ratios that will be worked out, will be different as compared to others and will not be comparable. 3. Only a media of interpretation- Ratio analysis is only a guide in analysis of financial statements, and not conclusive end itself. 4. Lack of proper standards- There is almost no single standard ratio against which the actual ratios are measurable. Circumstances differ from firm to firm and the nature of each industry. Therefore, the standards will differ for each industry and the circumstances of each firm will have to be kept in mind. 5. Meaningless ratio- A single ratio in itself does not furnish a complete picture. Conclusions based on single ratio are not appropriate until they are fully studied about the problem e.g. profitability conclusions can be arrived at only by using all the ratios. 6. Ignorance of price level changes- Changes in price level often make comparison of figures for various years difficult. For example, the ratio of sales of fixed assets in the year 2007 would be much higher than in the year 2002 due to rising prices. This is because although sales are recorded in the price level of the year2007, fixed assets do not reflect their current values, as they are not adjusted for changes in the price level. 7. Affected by window dressing- Manipulation of accounts in such a way so it present the financial statements in such a way to show better position than what it actually is: it is called window dressing. 8. Effect of Inherent limitations of accounting- Accounting is based on concepts, conventions and assumptions. Therefore, ratios can only be as correct as the accounting data on which they are based are. They suffer from all the inherent weaknesses of the accounting system itself. 9. Lack of Qualitative analysis of the problem- Ratio analysis is the quantitative measurement of the performance of the business. It ignores the qualitative aspect of the firm, howsoever important it may be. For example, credit may be granted to a customer on the basis of his solvency as disclosed by certain ratios but the grant of credit ultimately depends upon the character and managerial ability of the customer. Then conclusions are drawn from ratio analysis are misleading.

YOGESH KUMAWAT, FACULTY , MJRP UNIVERSITY, PHD, MBA- MKTG, PGDBM- FINANCE, LLB, BCOM Types of Ratios 1. 2. 3. 4. 5. Liquidity Ratios Turnover Ratios Profitability Ratios Leverage Ratios Valuation Ratios

Liquidity Ratios Liquidity refers to the ability of the firm to meet its short time obligations, usually in an accounting year. Every short term creditor or commercial bank have interest in the liquidity of the firm, since they assess the safety of their short term debts on this basis. 1. Current Ratio- Current ratio is the relationship between current assets and current liabilities. Current assets are such assets which can be converted into cash themselves, within a period of one year. Current liabilities are such obligations which are to be paid within a period of one year out of current assets. Low current assets indicates the problems in payment of short term obligations of the company. Ideal ratio = 2:1

2. Liquid Ratio- This ratio indicates the ability of the firm to pay of its debts immediately. Only such assets are included in liquid assets which are immediately convertible in cash. Ideal Ratio = 1:1

3. Cash Ratio-

YOGESH KUMAWAT, FACULTY , MJRP UNIVERSITY, PHD, MBA- MKTG, PGDBM- FINANCE, LLB, BCOM Turnover Ratios 1. Stock or Inventory Turnover Ratio- This ratio shows the liquidity of stock. It also discloses whether the stock is within specified limits or not. This ratio reveals the number of times finished stock is turn over into sales. It also indicates whether stock is being used properly or not. A high ratio means efficient business activities and is an indication of low investment in inventory.

2. Debtors turnover Ratio- This ratio reveals the efficiency of the management in the collection of debtors. The larger ratio indicate speedy collection from debtors.

3. Creditors turnover Ratio- This ratio throws light on the speed with which the payment to creditors is made. A high turnover ratio as compared to other firms engaged in same business shows the availability of less credit.

4. Total Assets turnover Ratio- This ratio shows the number of times the total assets are turnover with reference to sales. The higher ratio indicates the effective utilization of investments in assets.

5. Fixed assets turnover Ratio- This ratio measures the efficiency and profit earning capacity of the firm. The high ratio indicates intensive utilization of fixed assets.

6. Current assets turnover Ratio- This ratio measures the efficiency and usefulness of current assets. The low ratio indicates the inefficient use of current assets.

YOGESH KUMAWAT, FACULTY , MJRP UNIVERSITY, PHD, MBA- MKTG, PGDBM- FINANCE, LLB, BCOM 7. Working capital turnover Ratio- This ratio indicates the efficiency with which working capital is being used in the business.

8. Capital turnover Ratio- The main object of this ratio is to test the usefulness of capital employed in business.

9. Average Collection Period-

10. Average Payment Period-

3. Profitability Ratio 1. Gross profit Ratio- This ratio reflects the efficiency of business and the capacity of the firm to earn profit.

2. Operating Ratio- this ratio tries to find out that portion of share which has been spent as operating cost. The lower the ratio, better is the position of business which is treated good for the firm.

3. Operating profit Ratio-

YOGESH KUMAWAT, FACULTY , MJRP UNIVERSITY, PHD, MBA- MKTG, PGDBM- FINANCE, LLB, BCOM 4. Net profit Ratio- The main object of this ratio is to know the efficiency and profitability of the organization.

5. Return on capital employed- It is also called return on investment. On this basis, total profitability of the firm is tested.

6. Return on proprietor fund or equity- It is also known as return on networth, return on shareholder equity, return on owner equity, return on shareholder fund.

7. Return on equity shareholder fund- This ratio finds out the actual profit earning capacity of the firm. With the help of this ratio inter company comparision of different companies is made which helps the investors in decision making.

8. Return on total assets- This ratio reveals the return on total assets and the working efficiency of the management. If it is high, the profit earning capacity of the company is considered high.

4. Leverage Ratio 1. Debt equity ratio- This ratio highlights the general financial strength of the firm. Thus, it indicates the long term solvency of the firm along with the firm intention of trading on equity. This ratio also gives the idea of investment of owner fund in

YOGESH KUMAWAT, FACULTY , MJRP UNIVERSITY, PHD, MBA- MKTG, PGDBM- FINANCE, LLB, BCOM sundry assets. If it is high, the position of creditors will be more unsecured since the dues of creditors would be higher as compared to owners. So higher or lower ratio both are not good.

2. Proprietory ratio- This ratio is also known as owners equity or networth to total assets ratio.

3. Solvency ratio-

4. Fixed assets ratio-

5. Debt service ratio-

5. Valuation Ratio 1. Earning per share(EPS)- This ratio throws light on the profit earning capacity of equity share capital by comparing two years profits.

2. Price Earning ratio(P/E ratio)- This ratio discloses that the market price of the share is how many times of earning of that share? Lesser this ratio, would be more beneficial for the prospective investors.

YOGESH KUMAWAT, FACULTY , MJRP UNIVERSITY, PHD, MBA- MKTG, PGDBM- FINANCE, LLB, BCOM 3. Dividend yield ratio- This ratio is useful for prospective investor. He would like to know that what will be his effective earnings, if he purchases shares at current market price.

4. Dividend per share(DPS)- It is generally accepted principle that a portion of profit is kept in the business and the balance is distributed as dividend among the shareholders.

5. Dividend payout ratio- By this, the company may know that how much part of its profits are distributed as dividend and how much is retained in business.

6. EV-EBITDA Ratio-

7. Market value to Book value ratio-

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