Ask Experts Questions for FREE Help !
Ask
    poularaki's Avatar
    poularaki Posts: 1, Reputation: 1
    New Member
     
    #1

    Oct 12, 2006, 07:57 AM
    Ratio analysis
    I would like to aski, what limitations I must consider of doing a ratio analysis in the construction sector.

    Thakn you,

    Poularaki
    manik chand dey's Avatar
    manik chand dey Posts: 63, Reputation: 2
    Junior Member
     
    #2

    Aug 22, 2008, 02:20 AM
    In construction sectors it is very difficult to differentiate between current assets and non current assets, due to difficulty in calculation of an exact operating cycle period. Hence some ratios like current, quick test ratio are very difficult to find out.
    ROLCAM's Avatar
    ROLCAM Posts: 1,420, Reputation: 23
    Ultra Member
     
    #3

    Dec 15, 2008, 04:43 PM

    The limitations here are that this sector does not fully abide by the PERIODIC CONVENTION.
    There is however a very good substitute ,
    One can adopt what is termed the PROJECT
    CONVENTION.
    These measurements can be arrived at
    For different projects within one organisation ,
    And also comparisons can be made
    With other businesses of a similar nature
    And also with the industry as a whole.

Not your question? Ask your question View similar questions

 

Question Tools Search this Question
Search this Question:

Advanced Search

Add your answer here.


Check out some similar questions!

Current ratio [ 2 Answers ]

Barney co.'s current ratio is 2:1. Which of the following transactions would normally increase Barneys's current ratio? A. purchasing inventory on account B. borrowing money by signing a long-term note C. collecting an account receivable D. purchasing land for cash

Ratio Analysis [ 1 Answers ]

Can someone help me please with this question? The lenders of X have asked you to prepare the following ratios for the company from their comparative financial statements. They are concerned about Soukup’s ability to continue as a going concern. The ratios are as follows: Year 2003 ...

Current Ratio [ 1 Answers ]

How would the following actions affect a firm’s current ratio? 1. A customer prepays in full for specially ordered merchandise that it will take 60 days to manufacture. 2. Inventory is sold at the firm’s normal 35% markup cost.

Firm's current ratio [ 2 Answers ]

How would the following actions affect a firm's current ratio? 1. Inventory is sold. 2. The firm takes out a bank loan to pay its suppliers. 3. A customer pays its overdue bills. 4. The firm uses cash to purchase additional inventories Thank you


View more questions Search