Month: May 2010

Return on Assets Ratio

Return on Assets ratio is one of the profitability ratio used to determine the utilization of Assets by the company to generate profits.Higher the value of ROA better is the usage of assets to make profit. The ROA is calculated by dividing the net income with total assets of the company. Total assets figure is obtained from balance sheet of XYZ Company by adding up current assets and fixed assets, net income figure is taken from the income statement of the XYS Company. Formula: ROA = Net Income / Current Assets + Fixed Assets ROA = 10 Million / 50 Million ROA = 0.2 X 100 = 20 % Company XYZ net income for the Year 2009 is 10 Million having 50 million of total assets. The company has 20% return on assets which shows the better utilization of total assets. The companies in production and manufacturing industries requires more resources then the companies in service industry. The ROA for service companies are better on the other hand assets intensive companies are on lower side due to massive amount of total...

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Debt Ratio

If a person show you a home and tells that he is the owner of that home worth 2 Million dollars. After this statement you may ask the person “ Whether the home is 100 % self financed or you took money from bank or someone else?”. The person can either tell you that 100 % amount of home is self financed or partial amount is self financed and rest is the liability which Bank financed on the cost of Interest rate. The purpose of the above story to help you to better understand the debt ratio concept. Debt ratio calculates the portion of total liabilities within the total assets of the company. It compares the total liabilities with the total assets of the company. Debt Ratio value can be obtained by dividing total liabilities with total assets of the company as mentioned in the below equation.   Debt Ratio = Total Liabilities of the Company                       Total Assets of the Company Debit Ratio =    10 Million                            20 Million   Debit Ratio = 0.5 X 100 = 50 % it means Company XYZ assets are financed by external sources. XYZ Company has 50 % liabilities provided by external sources such as Banks on some cost known as cost of capital. Higher the percentage more will be the cost of capital company has to pay to the investors. High...

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Corporate Culture

Corporate culture is a collection of shared values, attitudes, beliefs, assumptions, and norms that create clear and successful business principles and operations which are helpful to attain higher degree of HRM and customer satisfaction. It is useful to understand organizational functioning and structure which provide information and guidelines for organizational behavior. Corporate culture works like a system. It takes Inputs from the people of any organization in the form of values, beliefs, norms and service that provide outputs in the form of generational behaviors, technologies, strategies, products, and services. Importance Of Corporate Culture A strong and clear defined corporate culture improves the performance of organizational processing or operations. It provides internal behavior consistency. Corporate culture provides information about expectations of members and organization. It conveys a sense of who the company is. This sense of identity is helpful among all the company’s stakeholders. Corporate culture provides an environment for better decision making process and useful to reduce overall risk. Corporate culture also provides a friendly environment among organizational members for completion of their tasks, objectives and goals efficiently and effectively. Impacts Of Corporate Culture On Organizational Structure And Design Corporate culture plays a vital role in any organizational structure and design. It has many impacts on organizational structure and design. Organizational design is the process, in which different dimensions and components of organizational structure and culture can manage in...

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