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

In the calculation of a turnover ratio,the numeratoris an amount from an annual income statement,while the denominator is a balance sheet amount .Since a balance sheet amount is a snapshot and reflects only an instant or moment ,there is an inconsistency between the numerator and the denominator . However,the numerator in the inventory turnover ratio is the cost of goods sold for the 365 days in year, while the denominator reflects the cost of inventory for a just one moment at the end of the last day of the accounting year . To overcome this shortcomings,the denominator needs to be representative of all the moments during the year .

The net profit is the numerator and the total assets is the denominator.

How do numerators and denominators effect the value of ratios?

In the calculation of a turnover ratio,the numeratoris an amount from an annual income statement,while the denominator is a balance sheet amount .Since a balance sheet amount is a snapshot and reflects only an instant or moment ,there is an inconsistency between the numerator and the denominator . However,the numerator in the inventory turnover ratio is the cost of goods sold for the 365 days in year, while the denominator reflects the cost of inventory for a just one moment at the end of the last day of the accounting year . To overcome this shortcomings,the denominator needs to be representative of all the moments during the year .

what are the benefits of these calculation ?

What is accounting information?

Higher numerator => larger value of fraction (and vice versa) higher denominator => smaller value of fraction (and vice versa)

Profit is the key to success.

The relationship of numerator to denominator in research depends on the measurement of the study, which is usually a ratio measurement. For example, if you were measuring the number of clients your particular business handles per month, the numerator is the number of clients divided by a denominator of a monthly clientele average.

Efectivamente podemos entender que los cambios internos y externos del mercado a la que las empresas están sujetas marcaran claramente el aumento o disminución de la rentabilidad de la empres el riesgo no se puede eliminar pero si mantener un riesgo controlado basado en una planificacion adecuada