# How changes to the numerator and the denominator impacts on the ratio

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• Study Notes

### Diploma in Business Management & Entrepreneurship - How changes to the numerator and the denominator impacts on the ratio

• Topic Reviews
United States of America 09 April 2017
Tashika B.

How do changes to the numerator and the denominator have impacts on the ratio?

Turkey 09 April 2017
BabaJide Martins F.

Educating...

South Africa 09 April 2017
Morne V.

This course has clearly illustrated about impacts of business activities. It has precisely presented through different terms for finding out ratio of each important activity.

Nigeria 09 April 2017
Sunday O.

Uganda 09 April 2017
Odongo M.

Accounting -> How changes to the numerator and the denominator impacts on the ratio How changes to the numerator and the denominator impacts on the ratio Each of the ratios stated above has a numerator and a denominator. For example: Net profit/(average) Total assets. The net profit is the numerator and the total assets the denominator. The ratio will be improved by increasing net profit at a faster rate than total assets or decreasing net profit at a slower rate. When discussing a change in a ratio you should: measure the ratio show how it was calculated explain the changes to the numerator and denominator that caused the ratio to change Looking at key items in the ratios in the tables above. Net profit May be increased by (for decreases reverse the increase/decrease below) an increase in sales a decrease in price, which may stimulate extra demand an improved location increased spending on advertising and sales wages Advertising better quality more appropriate increased spending Product quality type range Customer focus after sales services pre sales service extra services such as training Cost of goods sold buying in bulk - a decrease in buying costs, an increase in carrying costs cheaper items, risk of sacrificing quality more expensive items may have greater appeal leading to increased sales the margin between the cost price and the selling price is an important factor in the success of a business Expenses increased efficiency should be sought in use of expenses all expenses should be linked to the contribution they make to profit

Nepal 08 April 2017
Manish K.

This course has clearly illustrated about impacts of business activities. It has precisely presented through different terms for finding out ratio of each important activity.

Ghana 08 April 2017
Emmanuel A.

great

Morocco 08 April 2017

How do changes to the numerator and denominator impact ratio?

United Arab Emirates 08 April 2017
Gloria N.

The net profit is the numerator and the total assets the denominator. The ratio will be improved by increasing net profit at a faster rate than total assets or decreasing net profit at a slower rate.

Thailand 08 April 2017
Epie E.

course is just too satisfactory.How to put in place changes in ratios (numerators and denominators)well explained.

• Text Version

### Diploma in Business Management & Entrepreneurship - How changes to the numerator and the denominator impacts on the ratio

Accounting - How changes to the numerator and the denominator impacts on
the ratio

How changes to the numerator and the denominator impacts on the ratio

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Each of the ratios stated above has a numerator and a denominator. For
example: Net profit/(average) Total assets. The net profit is the numerator
and the total assets the denominator. The ratio will be improved by
increasing net profit at a faster rate than total assets or decreasing net
profit at a slower rate.

When discussing a change in a ratio you should:

* measure the ratio

* show how it was calculated

* explain the changes to the numerator and denominator that caused the
ratio to change

Looking at key items in the ratios in the tables above.

Net profit

May be increased by (for decreases reverse the increase/decrease below)

* an increase in sales

* a decrease in price, which may stimulate extra demand

* an improved location

* increased spending on advertising and sales wages

* better quality

* more appropriate

* increased spending

Product

* quality

* type

* range

Customer focus

* after sales services

* pre sales service

* extra services such as training

Cost of goods sold

buying in bulk - a decrease in buying costs, an increase in carrying costs

cheaper items, risk of sacrificing quality

more expensive items may have greater appeal leading to increased sales

the margin between the cost price and the selling price is an important
factor in the success of a business

Expenses

increased efficiency should be sought in use of expenses

all expenses should be linked to the contribution they make to profit

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