Financial Accounting - Assignment Example

Financial Accounting assignment y Company Balance sheet 31-Dec-13 Assets LiabilitiesCurrent assets Current liabilities Cash30,000Accounts payable21,000Short-term investments2,000Salaries payable3,000Accounts receivable13,000Interest payable16,000Inventories20,000Taxes payable2,000Prepaid Insurance5,000Current portion of note8,000 72,000  Long term investment Long term liabilities Stock investment40,000Notes payable1,000Cash Value of insurance10,000Bank loan8,000  Mortgage obligation2,000Property, plant & equip Total liabilities71,000Land8,000  Building and equipment150,000Stockholders equity less: accum Depreciation-50,000Capital stock45,000  Retained earnings3,000 Total stockholders equity48,000         Total assets180,000Total liabilities and equity180,000assignment 2Fixed Asset TurnoverSales/ Total Fixed Assets21.781.521.321.19Sales 100,000 105,000 110,775 117,422 125,171 Total Fixed Assets 50,000 58,717 72,793 88,619105,144Net Profit MarginNet Profit / Sales 8.00%8.50%9.20%10.00%10.

50%Net Profit8,0008,92510,19111,74213,143Sales100,000105,000110775117,422125,171Return on AssetsNet Profit / Total Assets11.43%11.18%10.74%10.48%10.09%Net Profit80008925101911174213143Total Assets70,0007980194904112,010130,228Analyzing the financial information of the company (2008-2012) it can be determined that the profit margin of the company has gradually increased. This reflects a healthy growth and sales volume of the company. During the period, the increase in the sales volume of the company plays a significant role in the profit margin of the company.

Analyzing profit margin of the company, it can be determined the company had highest growth in profits during 2009-2011. This is because of the reason that during the period an increase of .80 percent in the net profit margin has been determined, whereas in 2008-2009 and 2011-2012 an increase of .50 percent in the net sales of the company has been determined. According to the financial indicators, it can be determined that returns on assets and fixed assets of the company have eventually decline during the period.

This reflects that company remains inefficient to utilize it assets and fixed assets. the financial information of the company depicts that the 2008 had the highest asset and fixed assets turnover. On the other hand, 2012 is noted to have the lowest assets turnover. Though the profits of the company during the period have increased, this reflects that the company’s has high turnovers on equities. The company remains more efficient in utilizing its equities, rather than its assets. It can also be determined that the company has been more inclined to increase its assets, but its utilization has remained inefficient.

Analyzing the financial indictors of the company, it can be concluded the overall profitability of the company has eventually increased, whereas the assets turnover of the company depicts a declining trends during the period. This means that much of the company’s assets remain unutilized, therefore the management shall take appropriate measures to utilize its assets, which shall eventually contribute to the profit margins of the company. List of ReferencesLee, A. C. (2009). Financial Analysis, Planning & Forecasting: Theory and Application (llustrated ed.). London: World Scientific.