Got a tricky question? Receive an answer from students like you! Try us!

M3A1 - Essay Example

Only on StudentShare
Author : zortiz
Finance & Accounting
Pages 3 (753 words)


A ratio analysis of Honest Tea is illustrated below: 1999 Jun-00 Gross margin 28.46% 36.93% Net margin -71.74% -36.23% Return on assets (ROA) -0.78 -1.70 Return on equity (ROE) -0.97 -0.19 Working capital 742285 811327 Current ratio 4.41 5.92 Quick acid 3.04 3.29 Inventory turnover 2.50 0.83 Debt ratio 0.19 0.12 Debt to equity 0.24 0.14 The gross margin and net margin of the company during 1999 and during the 2nd quarter of 2000 were extremely bad…

Extract of sample

This implies that the firm’s current assets exceed its current liabilities. The current ratio and quick acid ratio of the company after the 2nd quarter of 2000 were 5.92 and 3.29. Both ratios are outstanding due to the fact that they exceed the 1.0 threshold (Garrison & Noreen, 2003). Honest Tea is in a good position to pay off its short term debt. During 1999 the firm was able to turn its inventory 2.50 times during the year. The debt ratio and debt to equity ratio of the company demonstrate that the firm has not incurred in long term financing options. Case study analysis questions: 1) Does the Tea market appear to be attractive as of the year 2000? Explain by referencing relevant metrics and information. The Tea market appears to be attractive for the year 2000. Tea is one of the fastest growing drinks in the United States due to its unique attributes. The competition in the tea market is not as severe as the competition in other segments of the drink industry such as in the carbonated soda sector in which Coca Cola and Pepsi dominate. As of 1999 there were 2,595,500 gallons of tea consumed by the American public or 9.5 gallons per capita. 2) How is Honest Tea doing financially and otherwise? Discuss by referencing relevant metrics and other information. ...
Download paper
Not exactly what you need?

Related Essays

Advanced Financial Reporting - Prevalence of Creative Accounting
This report will be evaluating the reasons that give rise to creative accounting by organizations; the grounds for the nativity of this practice will also be discussed. The evaluation of the efforts made by existing standards and accounting practices in controlling and reducing aggressive accounting will be catered in the report. The levels of success achieved by regulatory bodies will also be discoursed. Increasing the complexity of accounting treatments in such a creative and aggressive way, actually results in deviation from the actual spirit of the suggested treatment. Transactions are…
11 pages (2761 words)
Islamic Financial System as an Effective Planning & Control Framework in Kuwait
Planning helps in arranging the required business operations in a sequence which facilitates in carrying out the functions in an effectual way. The control process refers to the activities of handing over, assessing and modifying resources on a constant basis for the reason of attaining the intended goals of a particular organization. Similarly, the function of control has been referred to a procedure that is supposed to be undertaken by the organization or its managers with the purpose of making certain that the definite performance obey the rules as specified in the plans of the…
How is the reasoning on the given issue adrift and how might that reasoning be approved? I chose the issue of Legalization of M
One side is against Marijuana legalization and wants it to be banned or abolished because of the negative impacts, it could have on the human lives. On the other hand, the supporting side views at the positive effects of Marijuana, particularly its medicinal purposes and how its legalization could save many lives and alleviate the sufferings of many people. However, if one takes the supporting stance and favors legalization of Marijuana, the reasoning seems adrift regarding certain aspects. At the same time, a stronger reasoning can be formed in favor of legalization. So, this paper focusing…
5 pages (1255 words)
Parity Theories
This simply indicates uniformity in the prices of fixed number of goods and services and exchange rate of two countries. The roots of this theory lie in the law of one price, which says that homogenous goods should have identical prices universally not including any carrying or shipping costs under the prevalence of perfect competition if the pertinent national prices are stated in a common currency. The law of one price has certain conditions, which must exist in order for this law to be applicable. Firstly, it is the presence of competitive market for goods and services in two countries…
8 pages (2008 words)
Management Compensation Research Paper
Compensation is an essential component of human resource management, which aids in motivation of employees, besides enhancing organizational effectiveness. Types of Management Compensation Management compensation encompasses both intrinsic and extrinsic components in the form of monetary benefits and non-monetary benefits such as paid holiday. Compensation incorporates salary, as well as other rewards and allowances given to employees in return for their outstanding services. Compensation can be depicted as representing base pay, long-term incentives, bonuses, stock options, and benefits…
6 pages (1506 words)
Financial Statements
The debt amount is recorded as accounts receivable in the company’s books of accounts. The inventory represents items that are being sold in the company’s stores. The inventory also includes unused office supplies, unused cleaning supplies, and other unused items that are owned by the company. The building account is another company asset. Since the company owns the building, the building is included in the assets account. The office equipment is part of the company’s asset account. The office equipment includes the computers, typewriters, calculators, and adding machines. The company…
4 pages (1004 words)
management accounting & decision making
As at September 30, 20X0 Property, Plant and Equipment 1,840,000 Less: Depreciation (133,167) Net Book Value 1,706,833 Inventory 9,000 Receivables 144,585 Cash 172,700 Total Assets 2,033,118 Owner's Capital 2,000,000 Profit for the year (92) Creditors 12,960 Overhead cost payable 20,250 Total capital and liabilities 2,033,118 The above statement presents the cash budget, income statement and the statement of financial position for the six months ended September 30. In the forecasting of the cash budget, the effect of inflation has been ignored. During the six months period the inflation is…
8 pages (2008 words)