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Accounting for Managers

Analyzing financial statements and conducting ratio analysis for Morgan Ltd to evaluate profitability, debt, accounts receivable, interest coverage, and inventory turnover ratios.

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Added on  2022-11-07

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This document provides an analysis of profitability, liquidity, and efficiency ratios for a company. It also explains the break-even point in units and dollars, overhead recovery rates, and factors affecting them.

Accounting for Managers

Analyzing financial statements and conducting ratio analysis for Morgan Ltd to evaluate profitability, debt, accounts receivable, interest coverage, and inventory turnover ratios.

   Added on 2022-11-07

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Accounting for
Managers
Accounting for Managers_1
ACCOUNTING 1
Question 1:
A.
1. Profitability ratio helps to evaluate the earning power of the firm.
2. Debt to Assets Ratio supports the firm to evaluate the financial acquisition of assets.
3. Account Receivable Ratio defines the length of time to collect the amount of debtors in short
or long period.
4. Interest coverage ratio states the capability of the firm to recover the amount of interest.
5. Inventory Turnover Ratio defines the length of time which is taken by the business to sell its
inventories in the market.
B.
Ratio's 2018
Profitability
Ratio
Gross Margin Gross Profit
15750
0
Net Sales
85050
0
18.52
%
Net Profit Net Profit 94500
Net Sales
85050
0
11.11
%
Debt to Assets Total Debts
63,00
0
Accounting for Managers_2
ACCOUNTING 2
Total Assets
809,5
50 0.08
Account Receivables Sales
85050
0
Average Account
Receivable
28450
0 2.99
Interest Coverage
Ratio EBIT
15750
0
Interest Expenses 6300 25
Liquidity
Position
Current Ratio Current Assets
57015
0
Current Liabilities
31248
0 1.82
Quick Ratio
Current Assets (Account Receivables
+cash)
31815
0
Current Liabilities
31248
0 1.02
As per the ratio analysis, it has been evaluated that the ratio’s helps the organization to evaluate
the financial position. Liquidity, Efficiency and Profitability are the ratio that helps to assess the
capability of the company to survive for long time in the market (Robinson, Henry, Pirie, and
Broihahn, 2015).
C.
According to the evaluation of the company, it has been seen that profitability of the company is
strong which depict the high ability to generate the high revenue. But it has been seen that the
company does not generate the revenue as much as its volume of sale. As per the evaluation of
Accounting for Managers_3

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