Chapter Name: Calculate ratios
Description:The module is designed to provide learners with the skills needed to calculate and interpret financial ratios used in assessing a business's financial performance. This module covers key financial ratios, including liquidity ratios, profitability ratios, efficiency ratios, and leverage ratios. Learners will gain practical knowledge on how to use these ratios to evaluate a company's financial health, make informed business decisions, and compare performance with industry standards.
Purpuse:The purpose of this module is to equip learners with the ability to calculate and interpret essential financial ratios, enabling them to evaluate a business's financial health and performance effectively. By understanding and applying financial ratios, learners will be able to assess liquidity, profitability, operational efficiency, and leverage, which are key indicators of business success. The module aims to provide learners with the tools needed to make sound financial decisions, support strategic planning, and assess business performance in a franchise environment.
Rational:The rationale behind this module is based on the critical role that financial ratios play in understanding a business's financial position. Financial ratios are valuable tools for evaluating various aspects of a business's financial operations, including its ability to meet short-term obligations, generate profit, manage resources efficiently, and maintain a reasonable level of debt. By calculating and interpreting financial ratios, learners will be able to identify potential financial issues, make improvements, and ensure the financial stability of their business or franchise.
Chapter Assessment
Scope of Practical Skill
Key Requirement 1: Ratios correctly applied to measure the profitability and liquidity
Learners must apply standard financial ratios to assess a business's financial health.
Assessment Questions
Assessment 1 : Measure liquidity ratios
Learners must calculate liquidity ratios such as the current ratio or quick ratio to assess the company’s short-term financial health and ability to meet its short-term obligations.
Assessment 2 : Measure the profitability ratios
Learners are expected to calculate profitability ratios such as the net profit margin, return on assets, and return on equity to assess business performance.