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Strategic Accounting for Decision Making - Essay Example

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Strategic Accounting for Decision Making

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Question 2 (a)


Key ratios
Central Poll, Cardiff
Taff View Poll, Pontypridd
Field park (competitor)




Operating Profit/Operating Assets
1.55%
4.60%
21.00%
Operating Profit/Sales
1.41%
3.44%
7.60%
Sales/Operating Assets
1.10
1.34
2.80

909.09
746.30
357.14
Expenses/Sales
98.59%
96.56%
92.40%




Sales/Fixed Assets
1.14
1.39
3.05

877.20
719.40
326.80
Sales/Current Assets
31.40
37.38
33.00

31.80
26.80
30.30
Sales/Stock
46.55
92.35
206.00

21.50
10.80
4.90
Sales/Debtors
675.00
523.33
118.00

1.50
1.90
8.50
Current Ratio
0.914
0.75
1.40








Question 2 (b)
Analysis of the Key Ratios:

The study of the key financial indicators of both the pools as compared to those of the Field Park reveals the following analysis:

The important factor for consideration both in the case of Central Pool as well as Taff View is that there seems to be an immediate need for the sales to be enhanced since there is gross underutilisation of the operating assets. This is evidenced by the Ratios of Operating Profit to Operating assets and the Sales to Operating assets. As against the ratio of operating assets to operating profit of 21% in the case of Field Park it is 1.55% and 4.60% for Central Pool and Taff View respectively. These ratios are very low. Similarly the ratio of sales to operating assets is only 1.10%...
We can review this report together once you have gone through the basics. We can take up from there for the implementation of any suitable plan of action for the overall financial improvement of the units concerned.
The important factor for consideration both in the case of Central Pool as well as Taff View is that there seems to be an immediate need for the sales to be enhanced since there is gross underutilisation of the operating assets. This is evidenced by the Ratios of Operating Profit to Operating assets and the Sales to Operating assets. As against the ratio of operating assets to operating profit of 21% in the case of Field Park it is 1.55% and 4.60% for Central Pool and Taff View respectively. These ratios are very low. Similarly the ratio of sales to operating assets is only 1.10% for Central Pool and 1.34% for Taff View, whereas the same ratio for Field Park is 2.80%. Comparatively the ratios for Central Pool and Taff View are poor.
Similarly the profitability of both Taff View and Central Pool is well below the comparative profitability of the Field Park. This is quite obviously exhibited by the operating profit to sales ratio of both facilities. The operating profit to sales ratios stand at 1.41% for Central Pool and 3.44% for Taff View. These are very low as compared to the ratio of 7.60% for Field Park signifying the profitability of both the facilities is not up to the mark. ...Show more

Summary

I have made a study into the financial affairs of both Central Pool and Taff View Pool on the basis of the financial information for the year ended 30th April 2006 provided by the Leisure Service accountant. He also made me available some additional information concerning the working of these units…
Author : xgislason
Strategic Accounting for Decision Making Essay essay example
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