Energy conversion and management

BUSINESS STUDIES

Contents
Introduction............................................................................................................... 3
Global influence that may impact on this decision................................................................3
Financial Analysis....................................................................................................... 4
Global financial management way to opt a way out to get rid of the issues..................................9
References........................................................................................................... 11

Introduction
The report brings out a discussion on Softly Sofas Pty Ltd, which offers cosy, differentiated,
very comfortable, inspired solutions and the accessible price in Ligne Roset collection. At
first, the report comes up with factors (global and external risks) affecting the decision of the
organisation. Furthermore, the report analyse the financial statement of business with help of
ratio analysis. It is a tool, which can measure to gain insight in company`s liquidity,
profitability, and operational efficiency by elaborating financial statements. Furthermore,
there is a resolution of the company, which can minimise the impact of external and global
risks associated with company`s operations.
Global influence that may impact on this decision
Risks associated with entering New Zealand is the political risks and economic risks, which
will affect the organisation at its maximum on decision-making (Zavadskas et al., 2018). New
Zealand`s GDP grew 2.5 percent in 2019, which is expected to be at similar level in 2020 in
2.7 percent and 2021 of 2.6 percent. Political conditions are instable where business
environment leavers no scope for improvement (Visvizi, and Lytras, 2019). Government
rules and legislations for supplying wood materials to our country depends on the scope of
the of leverages and advantages availed to the local business. The country is highly
dependent on foreign investment to avail services to its people and high corporate debt level.
The nation is highly dependent on Chinese demand and it has lack of skilled labour. The
company will face issues in engaging R&D department and low labour productivity as
compared to other nations. The risks is not limited to political risks but it extends to
operational risks and financial risks (Zavadskas, Stević, Tanackov, and Prentkovskis, 2018).

Financial Analysis
The ratio analysis is a tool, which measure and analyse the economic statements of business.
The financial investigation is based on certain criteria through profitability, solvency, and
liquidity (Chen, Deng, and Chang, 2019).
Liquidity ratio-
Current ratio and acid test ratio are the two prominent ratios to test the liquidity position of
the company. Liquidity ratio analyses whether the business is capable to pay off short-term
loans and obligations with the help of current assets (Karadağ, and Selçuk, 2017).
2017 2018
0.47
0.48
0.49
0.50
0.51
0.48
0.50
Acid test ratio
Acid test ratio
Liquidityratio 2017 2018
Current ratio 0.89 0.89
Acid test ratio 0.48 0.50
The above table indicates that standard ratio for current ratio is 2:1, which shows that the
company generates two times of current assets to pay off current liabilities.