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Financila reporting for Summer bodysuit Ltd (SBL) startup company - Essay Example
Finance & Accounting
Pages 11 (2761 words)
Financial Reporting [University] [Instructor Name] Introduction Summer bodysuit Ltd (SBL) is a startup company, which a designer and manufacturer of casual and leisure clothes aimed particularly at the younger, higher-income market…
This problem is so serious that the bank has requested the company to reduce its overdraft for the next six months, hence worsening its already ailing cash slow. As a member of Drake Management Consultants, who have been mandated to advise the company regarding financial issues, I have undertaken to write this report, citing the key problems and offering some recommendations regarding the problems that the company is undergoing. Analysis of the company’s financial statements Return on capital employed (ROCE) The ROCE for Summer Bodysuit Ltd (SBL) has increased from 15.9% to 23.8%, which is a favorable trend. This shows that the business has efficiently invested its resources to create profits. However, the management should be careful to ensure that this rate is maintained at a higher rate than that of borrowing; otherwise its benefit may not be realised (Baker and Wurgler 30). Year before last Last year Profit before Tax 1,668 3,706 Capital Employed 10,474 15,600 ROCE = ((Profit before Tax) / (Capital Employed)) * 100. ...
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