From:(Business Consultant)
Date:October 2007
Subject:Company motion for the year oddment September 2007.
Introduction.
The purpose of this report is to assess the financial performance and eyeshot for the year ended
30th September 2007 compared to performance and position for the year ending 30th September 2006.
Areas that were addressed:
advantageousness:
To asses if the management has utilized the revenue of the company to generate pricy profits.
Liquidity:
To ascertain how quick the company can rule cash to meet the commitments of its current liabilities.
Solvency:
To asses if the company postulate fitting assets to cover its liabilities.
20072006
Return on year-end capital employed.11.20%7.10%
take hold of assets (equal to capita employed) turnover.2.21.6
Nett profit (before tax) margin.6.40%4.40%
Current ratio.0.9:12.5:1
Closing account holding period (in geezerhood)46 days37days
Trade receivables ingathering period (in days)19days16days
Trade payables collection period (based on C.O.S) (in days)42days32 days
Gearing (debt over debt plus equity)46.70%Nil
PROFITABILITY:
1.Return on capital, clear assets and nett profits carry maturation.
The acquisition of Fatima has compete a vital role in the increase. A nett loss would have recorded if Fatima was not purchased.
LIQUIDITY:
1.A current ratio of 2:1 is usually considered to be acceptable depending on industry norms. Current ratio has dropped from 2.5:1 to 0.9:1. This is a concern as the company does not have enough cash to pay its current liabilities. This is evident from the trust overdraft at the end of the year.
2.Debtors are taking three days longer to settle accounts. This may lead to cash take to the woods woes in the future.
3.Inventory holding days have increase by nine days. This proves that the companys sales have slowed down over the past year.
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