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Case Study Financial & Management Accounting: Financial and trend analysis and industry comparisons - Essay Example
Finance & Accounting
Pages 4 (1004 words)
Case Study Financial & Management Accounting: Financial and Trend Analysis and Industry Comparisons Table of Contents Answer 1 3 Answer 2 4 Answer 3 4 Answer 4 5 Answer 5 5 Answer 6 6 Work Cited 7 Answer 1 Thunder Electronics Company SA (TEC) is a supplier of computer spare parts…
This reveals that the company has been able to increase its profit during the financial gloom, which is a positive sign for investors. However, in the balance sheet it can be seen that the cash balance has reduced to $30,000 in 2012 from $40,000 in 2011. The current assets are more in comparison to current liabilities, which proves that the company has enough working capital to manage its operational functions. The number of shares in 2012 has increased to 38,000, which indicates a further issue of 8000 shares, as there were 30,000 shares in the previous years. The earnings per share have also from $2.94 in 2010, $3.06 in 3011, to $3.15 in 2012. The liquidity ratios reveal that the liquidity position of the company has deteriorated from 2010 to 2012, which is not a good indication, and indicates towards insolvency in future if this trend continues (Wolk, and Tearney 10-15). The leverage ratio of the company also shows an increasing trend, which means that risks associated with investment are high. The profitability ratios reveal that there has not been any drastic improvement in profitability over the years, and the return on equity has decreased from 14.20 percent in 2011 to 13.98 percent. The problem is that CEO Bob Scott is focusing too much on an increase in sales of 25 percent. ...
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