11 July Accounting

Accounting
Afterschoool – developing change makers

CENTRE FOR SOCIAL
ENTREPRENEURSHIP
PGPSE PROGRAMME – OPEN FOR ALL
FREE FOR ALL
www.afterschoool.tk AFTERSCHOOOL MATERIAL F

OR PGPSE PARTICIPANTS
Accounting
Dr. T.K. Jain.
AFTERSCHOOOL
Centre for social entrepreneurship
Bikaner
M: 9414430763
tkjainbkn@yahoo.co.in
www.afterschool.tk
www.afterschoool.tk

Investing and
Financing
Decisions and
the Balance Sheet
Chapter 2

Understanding the Business
To understand amounts appearing
on a company’s balance sheet we
need to answer these questions:
What
How do How do
business
specific companies
activities cause
activities keep track of
changes in
affect each balance sheet
the balance
balance? amounts?
sheet?

Learning Objectives
Define
Define the
the objective
objective of
of financial
financial reporting,
reporting, the
the
elements
elements of
of the
the balance
balance sheet,
sheet, and
and the
the related
related
key
key accounting
accounting assumptions
assumptions andand principles.
principles.

The Conceptual Framework
Objective
Objectiveof
ofFinancial
FinancialReporting
Reporting
To
Toprovide
provideuseful
usefuleconomic
economicinformation
informationto
toexternal
externalusers
users
for
fordecision
decisionmaking
makingand
andfor
forassessing
assessingfuture
futurecash
cashflows.
flows.
Qualitative
QualitativeCharacteristics
Characteristics Elements
Elementsof
ofStatements
Statements
Relevancy
Relevancy Asset
Asset
Reliability
Reliability Liability
Liability
Comparability
Comparability Stockholders’
Stockholders’Equity
Equity
Consistency
Consistency Revenue
Revenue
Expense
Expense
Gain
Gain
www.afterschoool.tk AFTERSCHOOOL MATERIAL F Loss
Loss
Objective
Objectiveof
ofFinancial
FinancialReporting
Reporting
To
Toprovide
provideuseful
usefuleconomic
economicinformation
informationto
toexternal
externalusers
users
for
fordecision
decisionmaking
makingand
andfor
forassessing
assessingfuture
futurecash
cashflows.
flows.
Primary Characteristics
Qualitative
QualitativeCharacteristics
Characteristics Elements
Elements of
ofStatements
Statements
•Relevancy: predictive value,
Relevancy
Relevancy feedback value,Asset
and timeliness.
Asset
Reliability •Reliability: verifiability,
Liability
representational faithfulness,
Comparability
Comparability Stockholders’
Stockholders’ Equity
Equity
and
Consistency
Consistency neutrality. Revenue
Revenue
Expense
Expense
Secondary Characteristics
•Comparability:Gain
Gain
across
www.afterschoool.tk AFTERSCHOOOL companies.
MATERIAL F
Loss
Loss
Asset: economic resource with
probable future Objective
benefit.
Objective ofofFinancial
FinancialReporting
Reporting
Liability:
To probable
provide future
useful sacrifices
economic of information to external users
To provide
economic resources. useful economic information to external users
for
fordecision
decision
Stockholders’
making
making
Equity:
and
andfor
financing forassessing
assessingfuture
futurecash
cashflows.
flows.
provided by owners and operations.
Revenue: increase in assets or Elements
Qualitative Characteristics
Qualitative Characteristics ElementsofofStatements
Statements
settlement of liabilities from ongoing
operations. Relevancy
Relevancy Asset
Asset
Expense: decrease in assets or
increase in liabilities from ongoing
operations.Comparable
Comparable Stockholders’
Stockholders’Equity
Equity
Gain: increase in assets or settlement
Consistent Revenue
Consistent Revenue
of liabilities from peripheral
activities. Expense
Expense
Loss: decrease in assets or Gain
increase in liabilities from peripheral Gain
www.afterschoool.tk
activities. AFTERSCHOOOL MATERIAL F Loss
Loss
Assumptions
Assumptions
Separate
Separate entity:
entity: Activities
Activities of
of the
the business
business are
are
separate
separate from
from activities
activities ofof owners.
owners.
Continuity:
Continuity: The The entity
entity will
will not
not gogo out
out ofof
business
business inin the
the near
near future.
future.
Unit-of-measure:
Unit-of-measure: Accounting
Accounting measurements
measurements
will
will be
be in
in the
the national
national monetary
monetary unit unit ($).
($).
Principle
Principle
Historical
Historical cost:
cost: Cash
Cash equivalent
equivalent cost
cost given
given up
up
is
is the
the basis
basis for
for initial
initial recording
recording of
of
elements.
elements.
Learning Objectives
Identify
Identify what
what constitutes
constitutes aa business
business transaction
transaction
and
and recognize
recognize common
common balance
balance sheet
sheet account
account
titles
titles used
used in
in business.
business.

Nature of Business Transactions
External events:
events exchanges of assets
and liabilities between the business
and one or more other parties.
Borrow cash
from the bank

Nature of Business Transactions
Internal events:
events not an exchange between
the business and other parties, but have
a direct effect on the accounting entity.
Loss due to
fire damage.

Accounts
An organized format used by companies
to accumulate the dollar effects of
transactions.
Cash Inventory
Notes
Equipment Payable

The Balance Sheet
Typical Account Titles
Assets Liabilities
Cash Accounts Payable
Short-Term Investment Accrued Expenses
Accounts Receivable Notes Payable
Notes Receivable Taxes Payable
Inventory (to be sold) Unearned Revenue
Supplies Bonds Payable
Prepaid Expenses
Long-Term Investments Stockholders’ Equity
Equipment Contributed Capital
Buildings Retained Earnings
Land
Intangibles
Typical Account
The Income Titles
Statement
Revenues Expenses
Sales Revenue Cost of Goods Sold
Fee Revenue Wages Expense
Interest Revenue Rent Expense
Rent Revenue Interest Expense
Depreciation Expense
Advertising Expense
Insurance Expense
Repair Expense
Income Tax Expense

International While
Perspective
U.S. companies follow
GAAP to prepare their
financial statements, other
countries have significant
variations from the
accounting and reporting
rules of GAAP.
Some countries use different

account titles than those used
by U.S. companies.
Learning Objectives
Apply
Apply transaction
transaction analysis
analysis toto simple
simple business
business
transactions
transactions inin terms
terms ofof the
the accounting
accounting model:
model:
Assets
Assets == Liabilities
Liabilities ++ Stockholders’
Stockholders’ Equity
Equity

Principles of Transaction
Analysis
 Every transaction affects at least two
accounts (duality of effects).
 The accounting equation must remain in
balance after each transaction.
A = L + SE
(Assets) (Liabilities) (Stockholders’
Equity)
Duality of Effects
Most transactions
with external parties
involve an
exchange where the
business entity
gives up something
but receives
something in return.

Balancing the Accounting
 Equation
Accounts and effects
• Identify the accounts affected and classify them by
type of account (A, L, SE).
• Determine the direction of the effect (increase or
decrease) on each account.
 Balancing
• Verify that the accounting equation (A = L + SE)
remains in balance.

Balancing the Accounting
Equation
Let’s see how we keep the
accounting equation in
balance for Papa John’s.
All amounts we use are expressed in

thousands of dollars.

Papa John’s issues $2,000 of additional
common stock to new investors for cash.
Identify
Identify&&Classify
Classifythe
theAccounts
Accounts
1.
1. Cash
Cash(asset).
(asset).
2.
2. Contributed
ContributedCapital
Capital (equity).
(equity).
Determine
Determine the
the Direction
Direction of
of the
theEffect
Effect
1.
1. Cash
Cashincreases.
increases.
2.
2. Contributed
ContributedCapital
Capitalincreases.
increases.

Notes Notes Contributed Retained

Cash Investments Equip. Receivable Payable Capital Earnings
(a) 2,000 2,000
Effect 2,000 = 2,000
A = L + SE
The company borrows $6,000 from the local
bank, signing a three-year note.
Identify
Identify&&Classify
Classifythe
theAccounts
Accounts
1.
1. Cash
Cash(asset).
(asset).
2.
2. Notes
NotesPayable
Payable(liability).
(liability).
Determine
Determine the
the Direction
Direction of
of the
theEffect
Effect
1.
1. Cash
Cashincreases.
increases.
2.
2. Notes
NotesPayable
Payableincreases.
increases.

bank, signing a three-year note.

(a) 2,000 2,000
(b) 6,000 6,000
Effect 8,000 = 8,000
A = L + SE
Papa John’s purchases $10,000 of new equipment,
paying $2,000 in cash and signing a two-year note
payable for the rest.
Identify
Identify&&Classify
Classifythe
theAccounts
Accounts
1.
1. Equipment
Equipment(asset).
(asset).
2.
2. Cash
Cash(asset).
(asset).
3.
3. Notes
NotesPayable
Payable(liability).
(liability).
Determine
Determine the
the Direction
Direction of
of the
theEffect
Effect
1.
1. Equipment
Equipmentincreases.
increases.
2.
2. Cash
Cashdecreases.
decreases.
3.
3. Notes
NotesPayable
Payableincreases.
increases.


(a) 2,000 2,000
(b) 6,000 6,000
(c) (2,000) 10,000 8,000
Effect 16,000 = 16,000
A = L + SE
Papa John’s lends $3,000 to new
franchisees who sign five-year notes
agreeing to repay the loan.
Identify
Identify&&Classify
Classifythe
theAccounts
Accounts
1.
1. Cash
Cash(asset).
(asset).
2.
2. Notes
NotesReceivable
Receivable(asset).
(asset).
Determine
Determine the
the Direction
Direction of
of the
theEffect
Effect
1.
1. Cash
Cashdecreases.
decreases.
2.
2. Notes
NotesReceivable
Receivableincreases.
increases.

Papa John’s lends $3,000 to new
franchisees who sign five-year notes
agreeing to repay the loan.
(a) 2,000 2,000
(b) 6,000 6,000
(c) (2,000) 10,000 8,000
(d) (3,000) 3,000
Effect 16,000 = 16,000
A = L + SE
Papa John’s purchases $1,000 of stock in
other companies as an investment.
Identify
Identify&&Classify
Classifythe
theAccounts
Accounts
1.
1. Cash
Cash(asset).
(asset).
2.
2. Investments
Investments(asset).
(asset).
Determine
Determine the
the Direction
Direction of
of the
theEffect
Effect
1.
1. Cash
Cashdecreases.
decreases.
2.
2. Investments
Investmentsincrease.
increase.

Papa John’s purchases $1,000 of stock in
other companies as an investment.

(a) 2,000 2,000
(b) 6,000 6,000
(c) (2,000) 10,000 8,000
(d) (3,000) 3,000
(e) (1,000) 1,000
Effect 16,000 = 16,000
A = L + SE
Papa John’s board of directors declares and
pays $3,000 in dividends to shareholders.
Identify
Identify&&Classify
Classifythe
theAccounts
Accounts
1.
1. Cash
Cash(asset).
(asset).
2.
2. Retained
RetainedEarnings
Earnings (equity).
(equity).
Determine
Determine the
the Direction
Direction of
of the
theEffect
Effect
1.
1. Cash
Cashdecreases.
decreases.
2.
2. Retained
RetainedEarnings
Earningsdecreases.
decreases.

Papa John’s board of directors declares and
pays $3,000 in dividends to shareholders.

(a) 2,000 2,000
(b) 6,000 6,000
(c) (2,000) 10,000 8,000
(d) (3,000) 3,000
(e) (1,000) 1,000
(f) (3,000) (3,000)
Effect 13,000 = 13,000
A = L + SE
Learning Objectives
Determine
Determine the
the impact
impact of
of using
using two
two basic
basic tools,
tools,
journal
journal entries
entries and
and T-accounts.
T-accounts.

TheDuring
Accounting
the period:
Cycle
Close revenues, gains,
Analyze transactions. expenses and losses
Record journal entries in the general journal. to retained earnings.
Post amounts to the general ledger.
Prepare a complete
End of the period: set of financial statements.
Adjust revenues and expenses Disseminate statements
and related balance sheet accounts. to users.

How Do Companies Keep Track
of Account Balances?
Journal entries
T-accounts

Direction of Transaction Effects
A T-account is a tool used to
represent an account.
Account Name
Left Right

Direction
The left side ofof
the Transaction Effects
The right side of the
T-account is always the T-account is always the
debit side. credit side.
Account Name
Left Right
Debit Credit

The Debit-Credit Framework
Debits
Debits and
and credits
credits affect
affect the
the Balance
Balance Sheet
Sheet
Model
Model as
as follows:
follows:
A = L + SE
ASSETS LIABILITIES EQUITIES
Debit Credit Debit Credit Debit Credit
for for for for for for
Increase Decrease Decrease Increase Decrease Increase

The Debit-Credit Framework
A = L + SE
ASSETS LIABILITIES EQUITIES
Debit Credit Debit Credit Debit Credit
for for for for for for
Increase Decrease Decrease Increase Decrease Increase
Remember that Stockholders’ Equity includes Contributed

Capital and Retained Earnings.
Analytical Tool: The Journal
Entry
A typical journal looks like this:
GENERAL JOURNAL
Posted
Date Account Titles and Explanation Ref. Debit Credit

Entry
A journal entry might look like this:
GENERAL JOURNAL
Posted
Jan. 1 Cash 20,000
Contributed Capital 20,000

Entry Debits are written first.
Provide a reference
date for each transaction.
GENERAL JOURNAL
Posted
Jan. 1 Cash 20,000
Total debits must equal

Credits are indented and total credits.
written after debits.

Analytical Tool: The T-Account
After journal entries are prepared, the
accountant posts (transfers) the dollar
amounts to each account affected by the
transaction.
GENERAL JOURNAL
Ledger
Posted
Date Account Titles and Explanation Ref.
Jan. 1 Cash
Debit
20,000
Credit
Post

Transaction Analysis Illustrated
Let’s prepare some

journal entries for
Papa John’s and
post them to the
ledger.

(a)
Cash Contributed Capital

Beg. Bal. 6,000 1,000 Beg. Bal.
(a) 2,000 2,000 (a)
8,000 3,000
bank, signing a one-year note.
(b)
Cash Notes Payable

Beg. Bal. 6,000 146,000 Beg. Bal.
(a) 2,000 6,000 (b)
(b) 6,000
14,000 152,000
(c)
Let’s see how to post this entry . . .

Equipment
Beg. Bal. 246,000
(c) 10,000
256,000
Cash Notes Payable

Beg. Bal. 6,000 146,000 Beg. Bal.
(a) 2,000 2,000 (c) 6,000 (b)
(b) 6,000 8,000 (c)
12,000 160,000
Balance Sheet Preparation
It is possible to prepare
a balance sheet at
any point in time from
the balances in the
accounts.

This is the asset section of Papa John’s
balance sheet.
Papa John's International, Inc. and Subsidiaries
Consolidated Balance Sheet
(dollars in thousands)
January 31, December 28,
2004 2003
ASSETS
Current assets
Cash $ 9,000 $ 7,000
Accounts receivable 20,000 20,000
Supplies 17,000 17,000
Prepaid expenses 11,000 11,000
Other current assets 7,000 7,000
Total current assets 64,000 62,000
Long-term investments 9,000 8,000
Property, and equipment (net of
accumulated depreciation of $149,000) 214,000 204,000
Long-term notes receivable 14,000 11,000
Intangibles 49,000 49,000
Other assets 13,000 13,000
Total assets $ 363,000 $ 347,000

This is the liability and stockholders’ equity
section of Papa John’s balance sheet.
Papa John's International, Inc. and Subsidiaries
Consolidated Balance Sheet
(dollars in thousands)
January 31, December 28,
2004 2003
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 28,000 $ 28,000
Dividends payable 3,000 -
Accrued expenses payable 53,000 53,000
Total current liabilities 84,000 81,000
Unearned franchise fees 6,000 6,000

Long-term notes payable 75,000 61,000
Other long-term liabilities 40,000 40,000
Total liabilities 205,000 188,000
Stockholders' equity
Contributed capital 3,000 1,000
Retained earnings 155,000 158,000
Total stockholders' equity 158,000 159,000
Total liabilities and stockholders' equity $ 363,000 $ 347,000
Learning Objectives
Prepare
Prepare and
and analyze
analyze aa simple
simple balance
balance sheet
sheet
using
using the
the financial
financial leverage
leverage ratio.
ratio.

Change in Balance Sheet
Amounts
Stockholders'
Assets = Liabilities + Equtiy
End of January 2004 $ 363,000 $ 205,000 $ 158,000
End of 2003 347,000 188,000 159,000
Change $ 16,000.00 $ 17,000.00 $ (1,000.00)

Key Ratio Analysis
Financial
Average Total Assets
Leverage =
Average Stockholders’ Equity
Ratio
(Beginning Balance + Ending Balance) ÷ 2
The 2004 financial leverage ratio for Papa John’s was:

($363,000 + $347,000) ÷ 2
= 2.24
($158,000 + $159,000) ÷ 2
The ratio tells us how well management is using debt to

increase assets the company employs to earn income.
Learning Objectives
Identify
Identify investing
investing and
and financing
financing transactions
transactions
and
and demonstrate
demonstrate how
how they
they are
are reported
reported
on
on the
the statement
statement of
of cash
cash flows.
flows.

Statement of Cash Flows
Operating activities
(Covered in the next chapter.)
Investing Activities
Purchasing long-term assets and investments for cash –
Selling long-term assets and investments for cash +
Lending cash to others –
Receiving principal payments on loans made to others +
Financing Activities
Borrowing cash from banks +
Repaying the principal on borrowings from banks –
Issuing stock for cash +
Repurchasing stock with cash –
Paying cash dividends –

Statement of Cash Flows
Papa John's International, Inc.
Consolidated Statement of Cash Flows
For the Month Ended January 31, 2004
(in thousands)
Operating activities
(None in this chapter.)
Investing Activities
Purchased property and equipment $ (2,000)
Purchased investments (1,000)
Lent funds to franchisees (3,000)
Net cash used in investing activities (6,000)
Financing Activities
Issued common stock 2,000
Borrowed from banks 6,000
Net cash provided by financing activities 8,000
Net increase in cash 2,000
Cash at beginning of month 7,000
Cash at end of month $ 9,000

Have a nice future

ABOUT AFTERSCHOOOL
Afterschoool conducts three year integrated PGPSE (after
class 12th along with IAS / CA / CS) and 18 month PGPSE
(Post Graduate Programme in Social Entrepreneurship)
along with preparation for CS / CFP / CFA /CMA / FRM. This
course is also available online also. It also conducts
workshops on social entrepreneurship in schools and
colleges all over India – start social entrepreneurship club in
your institution today with the help from afterschoool and help
us in developing society.

Why such a programme?
 To promote people to take up entrepreneurship
and help develop the society
 To enable people to take up franchising and
other such options to start a business / social
development project
 To enable people to take up social
development as their mission
 To enable people to promote spirituality and
positive thinking in the world

Who are our supporters?
 Afterschoolians, our past beneficiaries,
entrepreneurs and social entrepreneurs
are supporting us.
 You can also support us – not
necessarily by money – but by being
promotor of our concept and our ideas.

About AFTERSCHOOOL PGPSE – the best
programme for developing great entrepreneurs
 Most flexible, adaptive but rigorous programme

 Available in distance learning mode
 Case study focused- latest cases
 Industry oriented practical curriculum
 Designed to make you entrepreneurs – not just an
employee
 Option to take up part time job – so earn while you
learn
 The only absolutely free course on internet

Workshops from
AFTERSCHOOOL
 IIF, Delhi
 CIPS, Jaipur
 ICSI Hyderabad Branch
 Gyan Vihar, Jaipur
 Apex Institute of Management, Jaipur
 Aravali Institute of Management, Jodhpur
 Xavier Institute of Management, Bhubaneshwar
 Pacific Institute, Udaipur
 Engineering College, Hyderabad

Flexible Specialisations:
 Spiritualising business and society
 Rural development and transformation
 HRD and Education, Social Development
 NGO and voluntary work
 Investment analysis,microfinance and inclusion
 Retail sector, BPO, KPO
 Accounting & Information system (with CA / CS /CMA)
 Hospital management and Health care
 Hospitality sector and culture and heritage
 Other sectors of high growth, high technology and social
relevance

Salient features:
 The only programme of its kind (in the whole world)
 No publicity and low profile course
 For those who want to achieve success in life – not just a degree
 Indepth knowledge and expertise
 Professional approac: World class approach
 Strong intellectual and business capabilities
 Flexible – you may stay for a month and continue the rest of the
education by distance mode. / you may attend weekend classes
 Scholarships for those from poor economic background
 Latest and constantly changing curriculum – keeping pace with
the time
 Placement for those who are interested
 Admissions open throughout the year
 Latest and most advanced technologies, books and study material

Components
 Pedagogy curriculum and approach based on IIM Ahmedabad and ISB
Hyderabad (the founder is alumnus from IIMA & ISB Hyderabad)
 Meditation, spiritualisation, and self development
 Essential softwares for business
 Business plan, Research projects
 Participation in conferences / seminars
 Workshops on leadership, team building etc.
 Written submissions of research projects/articles / papers
 Interview of entrepreneurs, writing biographies of entrepreneurs
 Editing of journals / newsletters
 Consultancy / research projects
 Assignments, communication skill workshops
 Participation in conferences and seminars
 Group discussions, mock interviews, self development diaryng
 Mind Power Training & writing workshop (by Dr. T.K.Jain)

Pedagogy
 Case analysis,
 Articles from Harvard Business Review
 Quiz, seminars, workshops, games,
 Visits to entrepreneurs and industrial visits
 Presentations, Latest audio-visuals
 Group discussions and group projects
 Periodic self assessment
 Mentoring and counselling
 Study exchange programme (with institutions out of India)
 Rural development / Social welfare projects

Branches
 AFTERSCHOOOL will shortly open its
branches in important cities in India
including Delhi, Kota, Mumbai, Gurgaon
and other important cities.
Afterschooolians will be responsible for
managing and developing these
branches – and for promoting social
entrepreneurs.

Case Studies
 We want to write case studies on social
entrepreneurs, first generation
entrepreneurs, ethical entrepreneurs.
Please help us in this process. Help us
to be in touch with entrepreneurs, so that
we may develop entrepreneurs.

Basic values at afterschoool
 Share to learn more
 Interact to develop yourself
 Fear is your worst enemy
 Make mistakes to learn
 Study & discuss in a group
 Criticism is the healthy route to mutual support and
help
 Ask fundamental questions : why, when, how &
where?
 Embrace change – and compete with yourself only

www.afterschoool.tk
social entrepreneurship for better
society


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Accounting

Afterschoool – developing change makers

www.afterschoool.tk AFTERSCHOOOL MATERIAL F

www.afterschoool.tk AFTERSCHOOOL MATERIAL F

www.afterschoool.tk AFTERSCHOOOL MATERIAL F

www.afterschoool.tk AFTERSCHOOOL MATERIAL F

www.afterschoool.tk AFTERSCHOOOL MATERIAL F

www.afterschoool.tk AFTERSCHOOOL MATERIAL F

from the bank

www.afterschoool.tk AFTERSCHOOOL MATERIAL F

www.afterschoool.tk AFTERSCHOOOL MATERIAL F

www.afterschoool.tk AFTERSCHOOOL MATERIAL F

Some countries use different

www.afterschoool.tk AFTERSCHOOOL MATERIAL F

www.afterschoool.tk AFTERSCHOOOL MATERIAL F

www.afterschoool.tk AFTERSCHOOOL MATERIAL F

All amounts we use are expressed in

www.afterschoool.tk AFTERSCHOOOL MATERIAL F

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Notes Notes Contributed Retained

Effect 2,000 = 2,000

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Notes Notes Contributed Retained

Effect 8,000 = 8,000

www.afterschoool.tk AFTERSCHOOOL MATERIAL F

Notes Notes Contributed Retained

Effect 16,000 = 16,000

www.afterschoool.tk AFTERSCHOOOL MATERIAL F

Effect 16,000 = 16,000

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Notes Notes Contributed Retained

Effect 16,000 = 16,000

www.afterschoool.tk AFTERSCHOOOL MATERIAL F

Notes Notes Contributed Retained

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www.afterschoool.tk AFTERSCHOOOL MATERIAL F

Remember that Stockholders’ Equity includes Contributed

www.afterschoool.tk AFTERSCHOOOL MATERIAL F

www.afterschoool.tk AFTERSCHOOOL MATERIAL F

Total debits must equal

www.afterschoool.tk AFTERSCHOOOL MATERIAL F

www.afterschoool.tk AFTERSCHOOOL MATERIAL F

Let’s prepare some

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Cash Contributed Capital

Cash Notes Payable

Let’s see how to post this entry . . .

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Cash Notes Payable

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www.afterschoool.tk AFTERSCHOOOL MATERIAL F

Unearned franchise fees 6,000 6,000

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(Beginning Balance + Ending Balance) ÷ 2

The 2004 financial leverage ratio for Papa John’s was:

The ratio tells us how well management is using debt to

www.afterschoool.tk AFTERSCHOOOL MATERIAL F

www.afterschoool.tk AFTERSCHOOOL MATERIAL F