StudentShare solutions
Triangle menu
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Finance - Essay Example

Nobody downloaded yet
Gitman(2005) in these words “A firm’s ability to satisfy its short term obligations as they come due”(p.58). It is one of the most important financial indicators of a firm. A firm which will not be able to satisfy its short term obligations will neither be able to satisfy its long term obligations/debts nor will be able to satisfy its stockholders. Time series analysis of Jool’s Product division shows unfavorable results, as out of five indicators four are showing negative results. Although current assets have increased in 2009 as compared to 2008 but increase in current liabilities is more as compared to current assets so division’s liquidity has decreased. Increase in inventory turnover shows that division is now more efficient in selling its inventory. While increase in debtor’s days shows that firm making more credit sales now and is inefficient in collecting its receivables and indicates that money is tied up in debtors. Decrease in creditor’s days shows that division’s credibility has decreased and its suppliers are allowing it less time to pay them back. Division should take immediate actions to decrease its current liabilities which will not only increase its liquidity but will also increase its credibility in front of its suppliers and other stakeholders. Moreover firm should adapt any mechanism to quickly collect its receivables. Asset turnover shows that division has ratio of 1.06 in 2009 which is higher than that in 2008 because the assets have increased but sales has also increased by a greater percentage. It shows that division is more quick in concerting its assets into sales now. Profitability analysis of the Jool’s Products division shows very favorable results as all of the profit indicators are showing highly favorable results which are not only good for division but will also contribute in overall profitability of Jools. But although the division is profitable but management should fix the problem of increasing current liabilities and should control operating expenses and receivables as it said by Gibson “ Even a very profitable entity will find itself bankrupt if it fails to meet its obligations to short term creditors”.(p.253) Kitchen Division Category Ratio 2009 2008 Result Liquidity Ratios Current Ratio 2.02 0.4 Favorable Quick Ratio 0.99 0.78 Favorable Stock Turnover 60.74 49.87 Favorable Debtor Days 15.52 18.17 Favorable Creditors Days 10.22 12.01 Unfavorable Efficiency Ratios Asset Turnover 2.20 2.33 Unfavorable Net working Capital Turnover 10.13 13.67 Unfavorable Profitability Ratios Net Profit Margin 3.51% 3.27% Favorable Operating Profit Margin 3.88% 3.61% Favorable Return on Assets 7.71% 7.62% Favorable Return on Equity 11.77% 11.90% Unfavorable Critical Analysis:- Time series analysis of Jool’s Kitchen Division’s liquidity shows favorable results. Division has a healthy short term obligations fulfilling ability. Inventory is efficiently sold, less credit sales are allowed and receivables are quickly collected. But in spite of its good liquidity conditions creditors are still allowing less time to pay back which is a matter of concern for management. Efficiency analysis of the ...Show more
Cite this document
  • APA
  • MLA
(“Finance Essay Example | Topics and Well Written Essays - 1000 words - 4”, n.d.)
Retrieved from
(Finance Essay Example | Topics and Well Written Essays - 1000 Words - 4)
“Finance Essay Example | Topics and Well Written Essays - 1000 Words - 4”, n.d.
  • Cited: 0 times


Finance for Managers Name: Faisal al Hajri Student number: 1068926 Tutor: Mrs. Kay Smith  Word count: 4018 Question 1:- Analysis of The Present Position of Jools Furniture Ltd. The table below presents the calculations from the information provided in the case study about furniture business…
Read Text Preview
Save Your Time for More Important Things
Let us write or edit the essay on your topic
with a personal 20% discount.
Grab the best paper

Check these samples - they also fit your topic

The Independent Commission on banking also known as Vickers Commission was also asked to consider competition in the UK banking sector. The UK government published its formal response to the Vickers Report in 2011 and has agreed with most of the recommendations made by the Vickers Commission.
4 pages (1000 words) Essay
This process of international expansion is made possible by the business corporations depending on certain premises like conducting trades related to exporting of commodities to foreign nations, through rendering investment in business units created in foreign territories, opening up of new production units in the foreign locations
4 pages (1000 words) Essay
Finance Name Institution Table of Content Introduction 3 Main Body 4 Conclusion…8 References…9 Appendix…10 Introduction The performance of a company is essential towards its growth. There are various internal, as well as external factors that have a great influence on the success of a business (Albert, 2008).
5 pages (1250 words) Essay
Some countries cooperate and jointly develop oil export capacity, while others focus on attracting enough investment to create their own routes. The oil and gas industry in the Azerbaijani is controlled by the major company State Oil Company of the Azerbaijan Republic (SOCAR).
5 pages (1250 words) Essay
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
Due to this systematic risk, the values of investments can be turned down and all this can occur because of financial transformation or other incidents that can affect the market to a great
10 pages (2500 words) Essay
In this regard, it is therefore contemplated that there must be an alternative system that can be relied in order to achieve the relative stability in the financial markets. Though Islamic
1 pages (250 words) Essay
The time for money value in this article is represented through the rating of risk free in a formula compensating the investors placing for money in a given time in an investment. This
1 pages (250 words) Essay
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
The two companies have poor current ratios and while this would be an indicator of inability to meet short-term obligations, it is less of a threat to a long-term investment approach. Current ratio is also just a comparison of current assets and
3 pages (750 words) Essay
Comments (0)
Click to create a comment
Let us find you another Essay on topic Finance for FREE!
Contact us:
Contact Us Now
FREE Mobile Apps:
  • About StudentShare
  • Testimonials
  • FAQ
  • Blog
  • Free Essays
  • New Essays
  • Essays
  • The Newest Essay Topics
  • Index samples by all dates
Join us:
Contact Us