(basic raw material) plus an oven to bake the cookies (plant and machinery), and also a place to keep the oven (premises). Plus, not to forget, skilled labor (You've got to know how to make cookies OR hire someone who can.). Last but not the least, your have to find a way to sell the cookies - either hire a salesman with a fixed pay or hire an agent with a fixed share in profits (Selling and distribution overhead). All these factors would sum up to be the 'Cost' incurred on making the cookies. Based on this cost, you may decide your expected 'Selling Price' and thus the 'Contribution' per unit. (Activity Ratios)
Also, to keep things going, you would need enough money readily available for your short term requirements (like buying more raw materials, paying rent, electricity bills, wages to employees, etc.) as well as for long term requirements (paying off debts, more money for further expansion, etc.). Also, you very well know that your creditors will supply you material on credit only if you are worthy of it. i.e. you are able to pay them in time. (Liquidity Ratios)
In both the cases, money doesn't come free of cost. Business should be profitable enough. Both the parties would again, check your credibility as well as the worthiness of the business. In the first case, you would be liable to pay a fixed interest to your bank, regardless of what you make. ...Show more
Imagine a scenario where you decide to start a new business, let's say of manufacturing cookies and selling them in your neighborhood. So you are not only the manager but also the owner (major share holders) of the company. It's a small closely knit business, but let's see its activities a little closely…
The ratio analysis has been performed with the help of the financial information present in the company’s financial statements. Different types of ratios have been calculated and divided into three categories, namely, liquidity ratios, activity ratios and profitability ratios.
Started as a small market stall in London’s East End in 1919 by Jack Cohen, today, Tesco Plc is the globe’s third largest supermarket with business operations spanning across 14 nations thereby serving millions of customers every week and offering jobs to more than 520,000 peoples around the world.
As per the Income Statement and the Balance Sheet, the company seems to be a very good profitable organisation but a mere look upon these two financial statements do not give a decisive position about a company’s performance, hence proper analysis needs to be done.
The author states that Diageo is a worldwide company, by means of its products delivering in about 150 markets around the globe. Diageo positioned itself as a premium brand but its positioning is not perfect. It should still promote its products as a premium products as well as it should maintain its brand loyalty so it can face intense rivalry.
Moreover, it is necessary to evaluate the performance of the business organization for measuring the fundamental financial status and implications as a whole. While evaluating the annual financial situation of General Motors, it is crucial to maintain the disclosure of the income statement, balance sheet and other relevant accounting frameworks.
According to the discussion financial statement analysis is differentiated from other approaches fundamentally because its main function is to assess the financial condition of an organization based on its financial statement. Several types of analyses can explain an organization’s financial condition.
regular supply of funds to the enterprise, to ensure optimal use of funds by prioritizing the projects that funds should be allocated to due to the constraint of funding availability, to have a robust and sound capital structure and to ensure that investors have reasonable and
The analysis was made so that any external investors who might be interested in the company are able to utilize the calculated ratio results to determine Riordan Inc’s performance and its most updated financial position and strategy. The discussed liquidity ratios of the
In addition, Boeing has a focus on the defense sector and at the same time through its subsidiary, Boeing Capital the business finances airplanes. Looking at both the current and cash ratios for S&S Air, we find that they are slightly below the