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Kingfisher plc (Accounting) - Book Report/Review Example

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Kingfisher plc (Accounting)

When the difference is divided by the prior year 2005's net income, the there is an increase in net income of 110 percent. This shows that investing in Kingfisher Plc(Hall, 2000).
As for the percentage change of profit from the year 2005 - 2006, Table 2 in the appendix shows that the difference between the profit of 2006 or 139,000,000 and the profit of 2005 at 446,500,000, When the difference if -307,500,00 is divided by the prior year 2005's profit, the there is an decrease in profit of 69 percent. This shows that investing in Kingfisher Plc. is not good.
As for the percentage change of net assets from the year 2005-2006, Table 3 in the appendix shows that the difference between the net assets of the year 2006 of 4,320,400 and the 2005 net assets of 4,387,300 was -66,900. When this amount is divided by the net assets of 2005, the resulting decrease is 2 percent(Pettigrew, 2006).
As for the current ratio for the year 2006 shown in Table 4 in the appendix, when the current assets of 2,180,700,000 was divided by the current liabilities of 2,221,200,000, the resulting current ratio is 98 percent. This test of liquidity shows that there are more than enough assets to pay for the liabilities of the company. This will impress on the investor to pump in additional capital or just simply maintain their current investments.


As for the current ratio for the year 2005 shown in Table 5, when the current assets of 1,944,800 was divided by the current liabilities of 1,996,500,000, the current ratio result is 97 percent. This test of liquidity(Moyer, 2005) shows that there are more than enough assets to pay for the liabilities of the company. This will impress on the investor to pump in additional capital or just simply maintain their current investments. This is good for the investor.

As for the acid test ratio or quick ratio for the year 2006 shown in table 6 below, when the sum of the cash and cash equivalents of 234,100,000 and marketable securities of 0 was divided by the current liabilities of 2,221,200,000, the quick ratio or acid test ratio was 11 percent. This shows that the company will be able to pay its short term debts from its most liquid asset of cash without having to rely on receivables(Noe, 2005) and borrowings to pay for the debt.

As for the acid test ratio or quick ratio(Hansen, 2006) for the year 2005 shown in table 7 below, when the sum of the cash and cash equivalents of 162,100,000 and marketable securities of 0 was divided by the current liabilities of ,996,500,000, the quick ratio or acid test ratio was 8 percent. This shows that the company will be able to pay its short term debts from its most liquid asset of cash without having to rely on receivables and borrowings to pay for the debt.

As for the financial leverage ratio shown in table 9 in the appendix below, when the sum of the share capital of 2006 of 2,450,000 is added to the share capital of 2005 of 2,434,900 which is 4,884,900 is divided by two, the average is 2,442,450. When the average total assets found of table 8 of 8,043,400 is divided by the average share capital in table 9 of 2,442,450, the financial leverage result is 3.29 percent. This is good for ...Show more

Summary

Financial statement analysis(Larson, 1995) is the best way to determine whether to increase investments in the business or to withdraw investments from the business. The following paragraphs explain in detail the importance of regulatory framework(Meigs, 1995) for companies producing financial reports in the international context…
Author : olsonjalon
Kingfisher plc (Accounting) essay example
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