Discuss the Three Separate Fronts on Which an Effective Financial

question 78

Essay

Discuss the three separate fronts on which an effective financial ratio analysis is conducted.

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Definitions:

Product Costs

Costs that are directly attributable to the creation of products including direct labor, direct materials, and manufacturing overhead.

Lean Production

A management approach that organizes resources such as people and machines around the flow of business processes and that only produces units in response to customer orders.

Inventories

Items such as raw materials, work-in-progress, and finished goods that a company holds for sale in the ordinary course of business.

Net Operating Income

The total profit of a company after operating expenses are subtracted from total revenue but before deducting taxes and interest.