StudentShare solutions
Triangle menu

N&S Finance - Essay Example

Nobody downloaded yet

Extract of sample
N&S Finance

Quick ratio Quick ratio, just as current ratio, is a measure of the company’s liquidity level, only that Quick ratio excludes inventory. This ratio is significantly below the current ratio, which could be an indication that the company is maintaining a high level of inventory. In case the company’s inventory is not easily convertible into liquid cash, then its financial position is at crossroads because it may experience difficulties paying its short-term creditors. The management should also consider whether the company is experiencing sales difficulties because that could be the reason why its inventory level is quite high. If this is the case, strategies should be crafted to increase conversion of inventory into cash so the liquidity could get better. Nonetheless, the positive increase from 0.83 to 0.95 is remarkable and if this trend continues, the company will not have liquidity problems. Accounts receivable turnover This ratio also shows the company’s liquidity level. It is a strong indicator of how the management has efficiently employed the accounts receivable. A ratio of 6.63 in 2009 is remarkably big, meaning that collection of accounts receivable and extension of credit to customers was operated efficiently. Alternatively, this may indicate that the company operated, chiefly, on cash basis. The drastic fall of the ratio in 2010 could send alarm signals to the management that something is wrong especially if this sale is not as a result of a shift from cash sales to credit sales. For instance, this could imply that the debtors are servicing their dues very slowly or even defaulting. Average Collection period Average collection period reflects the period that it takes for the company to receive its accounts receivables. The 53.03 days for 2009 is an ideal period because the company will be assured of conversion of its receivables into cash in less time and use the money to pay its bills. However, 214.38 days for 2010 is very high, and this means that the company may be headed for liquidity problems as a result of customers delaying or defaulting on their dues. This, in turn, will cause cash shortage and hence the company may not be able to meet its administrative and operating expenses. The management should revise its debt collection policies to avoid experiencing liquidity problems. Inventory turnover The inventory turnover for 2009 is 6.5 times, but this reduced to 3.96 times in 2010. This implies that the company’s sales have started moving slowly, which is discouraging because this will most likely affect the profits directly. This, however, could be a sign that the company is increasing its inventory. Decline in inventory turnover will result to cash shortage and hence this trend should be averted. Total asset turnover Total asset turnover indicates how the management has invested the assets to generate revenue. The higher the ratio the better because it shows that the assets are applied more efficiently. Reduction of this ratio from 0.93 in 2009 to 0.71 in 2010 is a cause for alarm because it indicates that the company’s assets are used less effectively, to generating income. The management should seek ways of boosting sales to ensure this ratio is restored to an optimum level. Debt to total assets Debt to total assets shows the company’s financial leverage, by revealing the proportion of the total assets that are funded by debt. In 2009, 47.14% of the assets were financed by creditors ...Show more

Summary

Current Ratio The ability of a company to pay its short-term dues using the current assets is determined through the current ratio. A value of 1 to 2 is an acceptable range and, therefore, the company has maintained a healthy position with 1.06 in 2009 and 1.27 in 2010…
Author : devenbradtke
N&S Finance essay example
Read Text Preview
Save Your Time for More Important Things
Let us write or edit the essay on your topic
"N&S Finance"
with a personal 20% discount.
Grab the best paper

Check these samples - they also fit your topic

Finance
For eg: Balance sheet (Assets & Liabilities), Profit and Loss statement (Revenue accounts, Cost of Goods sold accounts, Expense accounts, etc) Revenue and expenses Revenue is the income generated from the business entity through the sale of goods and services to its customers whereas expenses are the cost that is incurred by the company for the production of the available goods and services.
7 pages (1750 words) Essay
Finance
This has shown as increase of 15.1% as compared to year 2011 (Next Plc, 2012). Increase in earnings per share reflects an increase in the income earned by NEXT. Increased EPS even in times when UK economy is striving hard to push the growth momentum is reflective of sound efforts by NEXT plc to provide its shareholders capital and revenue benefit.
6 pages (1500 words) Essay
Finance
The European countries were hit hard by the subprime crisis of 2007. The origin of the financial crisis was rooted to the situation in which the mortgage loans were defaulted and the debt instruments backed by such loans failed (Mizen, 2008). As an ultimate effect of the crisis financial markets in the US were disrupted along with which the financial markets of Europe and other countries were also adversely affected.
12 pages (3000 words) Essay
Finance
Evaluation of Theoretical Price of Share 9 2. Selection of Companies 9 3. Dividend Discount Model 10 4. Forecasting Growth Rate 10 5. Comparative Earnings Methodology 12 6. Determination of Cost of Equity 13 7. Determination of Theoretical Price of the Selected Company 13 References 15 Appendices 17 Table 1 – Descriptive Statistical Analysis 17 Table 2 – Short-run IPO Performance Analysis in Australian Stock Market 17 Part A: Case Study – IPO Under-Pricing 1.
10 pages (2500 words) Essay
Islamic Finance
The size of Islamic finance has grown substantially over the years to the present estimated value of between $500 billion and $1,000 billion (Warde 43). However, despite this massive value, and the remarkable growth rates of 10-15%, Islamic finance is still an understated fraction of conventional banking
4 pages (1000 words) Essay
Finance
In United Kingdom all operational financial institutions are incorporated under the “Financial Services Authority” which is a self-governing non-legislative organization, aided by the legal powers under the “Financial Services and Markets Act
10 pages (2500 words) Essay
S
Knowing the wisdom of the saying that “He, who holds the purse, holds the power,” many believed that these international organisations are so powerful not only to influence but more so to determine development strategies, consequentially, the
12 pages (3000 words) Essay
Finance
Those investments or projects whose returns are negative must be disregarded. The following formula is generally used to depict the NPV of an investment or a project. The hypothetical example that follows the formula shows a positive NPV equal to
12 pages (3000 words) Essay
Finance
This research paper will explore the various financial instruments that the companies use for hedging their overseas exposure. The annual reports of various companies will be analysed in
8 pages (2000 words) Essay
Finance
It is calculated as difference close price on the date of listing and offer price of issue expressed as percentage of offer price of issue. In the US market, the short
10 pages (2500 words) Essay
Hire a pro to write
a paper under your requirements!
Win a special DISCOUNT!
Put in your e-mail and click the button with your lucky finger
Your email
YOUR PRIZE:
Apply my DISCOUNT
Comments (0)
Click to create a comment
Contact Us