ACCOUNTING RATIO Definition

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ACCOUNTING RATIO is the result of dividing one financial statement item by another. Ratios help analysts interpret financial statements by focusing on specific relationships.

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CAPITAL CHARGE is a monetary amount, calculated by multiplying the money the business has tied up in capital, by the weighted average cost of capital (WACC). Capital charge is deducted from net operating profit after tax to arrive at Economic Profit.

UNIT-LEVEL ACTIVITY, in Activity Based Costing, is an activity that must be done for each unit of production.

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