Accounting for Business Decision - Desklib

This article provides solved assignments and essays on Accounting for Business Decision. It includes journal entries, general ledgers, income statement, statement of change in equity, and balance sheet. It also discusses Lendlease Group, a multinational company engaged in the construction, property, and infrastructure business, and its competitors. The article also provides financial data of Lendlease Group for the year 2016 and 2017.

Running head: ACCOUNTING FOR FINANCIAL DECISION
Accounting for Business Decision
Name of the Student:
Name of the University:
Author’s Note:

1
ACCOUNTING FOR FINANCIAL DECISION
Table of Contents
Question 1:.......................................................................................................................................3
Question 2......................................................................................................................................11
Requirement (a).........................................................................................................................11
Requirement (b).........................................................................................................................11
Requirement c............................................................................................................................15
Requirement (d).........................................................................................................................15
Conclusion.................................................................................................................................16
Reference.......................................................................................................................................17

2
ACCOUNTING FOR FINANCIAL DECISION

3
ACCOUNTING FOR FINANCIAL DECISION
Question 1:
Dr. Cr.
Date Amount Amount
30-06-2017 Accounts Receivable Dr. 60000
To, Service Revenue 60000
Rent Expense Dr. 60000
To, Prepaid Rent 60000
Supplies Expense Dr. 36000
To, Supplies 36000
Depreciation Expense Dr. 48000
To, Accum Depr. - Equipment 48000
Salaries Expense Dr. 86400
To, Salaries Payable 86400
Interest Expense Dr. 7200
To, Interest Payable 7200
Comm. Rev. Rec'd in Advance Dr. 52800
To, Commission Revenue 52800
(Being commission received in advance recognized)
Journal Entries:
Particulars
(Being unrecorded credit sale recorded in the books)
(Being rent expired for the period recorded)
(Being supplies consumed in the period recorded)
(Being depreciation charged on equipment)
(Being salaries accrued recorded)
(Being interest accrued recorded)

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ACCOUNTING FOR FINANCIAL DECISION
Dr. Cr.
Date Particulars Amount Date Particulars Amount
30-06-2017 To, Balance b/d 915600 30-06-2017 By, Balance c/d 915600
915600 915600
Dr. Cr.
Date Particulars Amount Date Particulars Amount
30-06-2017 To, Balance b/d 43200 30-06-2017 By, Balance c/d 103200
To, Service Revenue 60000
103200 103200
Dr. Cr.
Date Particulars Amount Date Particulars Amount
30-06-2017 To, Balance b/d 180000 30-06-2017 By, Rent Expense 60000
By, Balance c/d 120000
180000 180000
Dr. Cr.
Date Particulars Amount Date Particulars Amount
30-06-2017 To, Balance b/d 72000 30-06-2017 By, Supplies Expense 36000
By, Balance c/d 36000
72000 72000
General Ledgers:
Cash A/c.
Accounts Receivable A/c.
Prepaid Rent A/c.
Supplies A/c.
Dr. Cr.
Date Particulars Amount Date Particulars Amount
30-06-2017 To, Balance b/d 960000 30-06-2017 By, Balance c/d 960000
960000 960000
Dr. Cr.
Date Particulars Amount Date Particulars Amount
30-06-2017 To, Balance c/d 48000 30-06-2017 By, Depreciation Expense 48000
48000 48000
Equipment A/c.
Accumulated Depreciation - Equipment A/c.

5
ACCOUNTING FOR FINANCIAL DECISION
Dr. Accounts Payable A/c. Cr.
Date Particulars
Amoun
t Date Particulars
Amoun
t
30-06-
2017 To, Balance c/d 153600
30-06-
2017 By, Balance b/d 153600
153600 153600
Dr. Salaries Payable A/c. Cr.
Date Particulars
Amoun
t Date Particulars
Amoun
t
30-06-
2017 To, Balance c/d 86400
30-06-
2017 By, Salaries Expense 86400
86400 86400
Dr. Interest Payable A/c. Cr.
Date Particulars
Amoun
t Date Particulars
Amoun
t
30-06-
2017 To, Balance c/d 7200
30-06-
2017 By, Interest Expense 7200
7200 7200
Dr. Comm Rev. Rec'd in advance A/c. Cr.
Date Particulars
Amoun
t Date Particulars
Amoun
t
30-06-
2017 To, Commission Revenue 52800
30-06-
2017 By, Balance b/d 96000
To, Balance c/d 43200
96000 96000
Dr. Bank Loan A/c. Cr.
Date Particulars
Amoun
t Date Particulars
Amoun
t
30-06-
2017 To, Balance c/d 720000
30-06-
2017 By, Balance b/d 720000

6
ACCOUNTING FOR FINANCIAL DECISION
720000 720000
Dr. Share Capital A/c. Cr.
Date Particulars
Amoun
t Date Particulars
Amoun
t
30-06-
2017 To, Balance c/d 840000
30-06-
2017 By, Balance b/d 840000
840000 840000
Dr. Dividends A/c. Cr.
Date Particulars
Amoun
t Date Particulars
Amoun
t
30-06-
2017 To, Balance b/d 24000
30-06-
2017 By, Balance c/d 24000
24000 24000
Dr. Service Revenue A/c. Cr.
Date Particulars
Amoun
t Date Particulars
Amoun
t
30-06-
2017 To, Balance c/d 681600
30-06-
2017 By, Balance b/d 621600
By, Accounts Receivable 60000
681600 681600
Dr. Commission Revenue A/c. Cr.
Date Particulars
Amoun
t Date Particulars
Amoun
t
30-06-
2017 To, Balance c/d 412800
30-06-
2017 By, Balance b/d 360000
By, Comm Rev. Rec'd in Advance 52800
412800 412800
Dr. Salaries Expense A/c. Cr.
Date Particulars
Amoun
t Date Particulars
Amoun
t
30-06- To, Balance b/d 434400 30-06- By, Balance c/d 520800

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ACCOUNTING FOR FINANCIAL DECISION
2017 2017
To, Salaries Payable 86400
520800 520800
Dr. Rent Expense A/c. Cr.
Date Particulars
Amoun
t Date Particulars
Amoun
t
30-06-
2017 To, Balance b/d 120000
30-06-
2017 By, Balance c/d 180000
To, Prepaid Rent 60000
180000 180000
Dr. Depreciation Expense A/c. Cr.
Date Particulars
Amoun
t Date Particulars
Amoun
t
30-06-
2017 To, Accum Dep.- Equipment 48000
30-06-
2017 By, Balance c/d 48000
48000 48000
Dr. Supplies Expense A/c. Cr.
Date Particulars
Amoun
t Date Particulars
Amoun
t
30-06-
2017 To, Supplies 36000
30-06-
2017 By, Balance c/d 36000
36000 36000
Dr. Electricity Expense A/c. Cr.
Date Particulars
Amoun
t Date Particulars
Amoun
t
30-06-
2017 To, Balance b/d 42000
30-06-
2017 By, Balance c/d 42000
42000 42000
Dr. Interest Expense A/c. Cr.
Date Particulars
Amoun
t Date Particulars
Amoun
t

8
ACCOUNTING FOR FINANCIAL DECISION
30-06-
2017 To, Interest Payable 7200
30-06-
2017 By, Balance c/d 7200
7200 7200
In the books of Kaylee Limited
Income Statement
for the year ended 30 June 2017
Particulars Amount
Revenue:
Service Revenue 681600
Commission Revenue 412800
TOTAL REVENUE 1094400
Expenses:
Salaries Expense -520800
Rent Expense -180000
Depreciation Expense -48000
Supplies Expense -36000
Electricity Expense -42000
Interest Expense -7200
TOTAL EXPENSE -834000
Net Profit for the period 260400
In the books of Kaylee Limited
Statement of Change in Equity
for the year ended 30 June 2017
Particulars Share Capital Retained Earnings
Opening Balance 840000 0
Add: Net Profit 260400
Less: Dividends -24000

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ACCOUNTING FOR FINANCIAL DECISION
Closing Balance 840000 236400
In the books of Kaylee Limited
Balance Sheet
as on 30 June 2017
Particulars Amount
Current Assets:
Cashg 915600
Accounts Receivable 103200
Prepaid Rent 120000
Supplies 36000
TOTAL CURRENT ASSETS
117480
0
Non-Current Assets:
Equipment 960000
Accum Depreciation -48000
TOTAL NON-CURRENT ASSETS 912000
TOTAL ASSETS
208680
0
Current Liabilities:
Accounts Payable 153600
Salaries Payable 86400
Interest Payable 7200
Comm. Rev. Rec'd in Advance 43200
TOTAL CURRENT ASSETS 290400
Non-Current Liabilities:
Bank Loan 720000
TOTAL NON-CURRENT LIABILITIES 720000
TOTAL LIABILITIES
101040
0
NET ASSETS
107640
0

10
ACCOUNTING FOR FINANCIAL DECISION
Equity:
Share Capital 840000
Retained Earnings 236400
TOTAL EQUITY
107640
0

11
ACCOUNTING FOR FINANCIAL DECISION
Question 2
Requirement (a)
Lendlease Group is a multinational company which is engaged in the business of
construction, property and infrastructure company which operates in Australia. The headquarters
of the company is situated in Sydney, Australia. The company is regarded as one of the
established companies in Real Estate business. The major competitors of the business who are
engaged in the same industry are DTZ group, Destia group, MITIE.
Requirement (b)
ASX Code Company Name Item 06/17 06/16 $movement % movement
LLC LendLease Group Rental Income 233,00,000.00 114,00,000.00 119,00,000.00 104.39%
LLC LendLease Group Investment Income 120,00,000.00 168,00,000.00 -48,00,000.00 -28.57%
LLC LendLease Group Other Income 168053,00,000.00 153221,00,000.00 14832,00,000.00 9.68%
LLC LendLease Group PreTax Profit 8079,00,000.00 6316,00,000.00 1763,00,000.00 27.91%
LLC LendLease Group Tax Expense -2483,00,000.00 -1647,00,000.00 -836,00,000.00 50.76%
LLC LendLease Group Net Profit after Tax Before Abnormals 5596,00,000.00 4669,00,000.00 927,00,000.00 19.85%
LLC LendLease Group Abnormals 1991,00,000.00 2312,00,000.00 -321,00,000.00 -13.88%
LLC LendLease Group Abnormals Tax 0.00 0.00 0.00 0.00%
LLC LendLease Group Net Abnormals 1991,00,000.00 2312,00,000.00 -321,00,000.00 -13.88%
LLC LendLease Group Reported NPAT After Abnormals 7587,00,000.00 6981,00,000.00 606,00,000.00 8.68%
LLC LendLease Group Outside Equity Interests -1,00,000.00 1,00,000.00 -2,00,000.00 -200.00%
LLC LendLease Group Shares Outstanding at Period End 5835,00,000.00 5823,00,000.00 12,00,000.00 0.21%
LLC LendLease Group Weighted Average Number of Shares 5610,00,000.00 5526,00,000.00 84,00,000.00 1.52%
LLC LendLease Group EPS Adjusted (cents/share) 99.73 84.51 15.22 18.01%
LLC LendLease Group EPS After Abnormals (cents/share) 135.22 126.35 8.87 7.02%
Figure 1: (Table showing Horizontal analysis of Profit and Loss Statement)
Source: (Created by Author)

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ACCOUNTING FOR FINANCIAL DECISION
ASX Code Company Name Item 06/17 06/16 $ movement % movement
LLC LendLease Group CA - Cash 12492,00,000.00 10084,00,000.00 2408,00,000 23.88%
LLC LendLease Group CA - Receivables 27492,00,000.00 27850,00,000.00 -358,00,000 -1.29%
LLC LendLease Group CA - Investments 314,00,000.00 361,00,000.00 -47,00,000 -13.02%
LLC LendLease Group CA - Other 22315,00,000.00 20284,00,000.00 2031,00,000 10.01%
LLC LendLease Group Total Current Assets 62613,00,000.00 58579,00,000.00 4034,00,000 6.89%
LLC LendLease Group NCA - Investments 90053,00,000.00 77214,00,000.00 12839,00,000 16.63%
LLC LendLease Group NCA - Property 0.00 0.00 0 0.00%
LLC LendLease Group NCA - Other 55876,00,000.00 50136,00,000.00 5740,00,000 11.45%
LLC LendLease Group Total NCA 145929,00,000.00 127350,00,000.00 18579,00,000 14.59%
LLC LendLease Group Total Assets 208542,00,000.00 185929,00,000.00 22613,00,000 12.16%
LLC LendLease Group Creditors 55788,00,000.00 43288,00,000.00 12500,00,000 28.88%
LLC LendLease Group Provisions 2920,00,000.00 2924,00,000.00 -4,00,000 -0.14%
LLC LendLease Group Other 48869,00,000.00 42031,00,000.00 6838,00,000 16.27%
LLC LendLease Group Total Curr. Liabilities 107577,00,000.00 88243,00,000.00 19334,00,000 21.91%
LLC LendLease Group Borrowings 36334,00,000.00 39504,00,000.00 -3170,00,000 -8.02%
LLC LendLease Group Deferred Tax 2382,00,000.00 1295,00,000.00 1087,00,000 83.94%
LLC LendLease Group Other 584,00,000.00 740,00,000.00 -156,00,000 -21.08%
LLC LendLease Group Total NCL 39300,00,000.00 41539,00,000.00 -2239,00,000 -5.39%
LLC LendLease Group Total Liabilities 146877,00,000.00 129782,00,000.00 17095,00,000 13.17%
LLC LendLease Group Share Capital 12651,00,000.00 11768,00,000.00 883,00,000 7.50%
LLC LendLease Group Reserves 11117,00,000.00 11466,00,000.00 -349,00,000 -3.04%
LLC LendLease Group Retained Earnings 36866,00,000.00 32896,00,000.00 3970,00,000 12.07%
LLC LendLease Group Other Equity 0.00 0.00 0 0.00%
LLC LendLease Group Convertible Equity 0.00 0.00 0 0.00%
LLC LendLease Group SE Held Sale 0.00 0.00 0 0.00%
LLC LendLease Group Outside Equity 1031,00,000.00 17,00,000.00 1014,00,000 5964.71%
LLC LendLease Group Total Equity 61665,00,000.00 56147,00,000.00 5518,00,000 9.83%
Figure 2: (Table showing Horizontal analysis of Balance Sheet)
Source: (Created by Author)

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ACCOUNTING FOR FINANCIAL DECISION
ASX Code Company Name Item 06/17 06/16 $ movement % movement
LLC LendLease Group Receipts from Customers 162546,00,000.00 160284,00,000.00 2262,00,000.000 1.41%
LLC LendLease Group Payments to Suppliers and Employees -159287,00,000.00 -151549,00,000.00 -7738,00,000.000 5.11%
LLC LendLease Group Dividends Received 754,00,000.00 900,00,000.00 -146,00,000.000 -16.22%
LLC LendLease Group Interest Received 99,00,000.00 128,00,000.00 -29,00,000.000 -22.66%
LLC LendLease Group Interest Paid -1204,00,000.00 -1348,00,000.00 144,00,000.000 -10.68%
LLC LendLease Group Tax Paid -1448,00,000.00 115,00,000.00 -1563,00,000.000 -1359.13%
LLC LendLease Group Other Operating Cashflows 0.00 0.00 0.000 0.00%
LLC LendLease Group Net Operating Cashflows 1460,00,000.00 8530,00,000.00 -7070,00,000.000 -82.88%
LLC LendLease Group Payment for Purchase of PPE -1603,00,000.00 -1788,00,000.00 185,00,000.000 -10.35%
LLC LendLease Group Proceeds From Sale of PPE 131,00,000.00 167,00,000.00 -36,00,000.000 -21.56%
LLC LendLease Group Investments Purchased -5017,00,000.00 -5889,00,000.00 872,00,000.000 -14.81%
LLC LendLease Group Proceeds From Sale of Investments 1649,00,000.00 3305,00,000.00 -1656,00,000.000 -50.11%
LLC LendLease Group Payments for Purchase of Subsidiaries 0.00 0.00 0.000 0.00%
LLC LendLease Group Proceeds from Sale of Subsidiaries 5484,00,000.00 3825,00,000.00 1659,00,000.000 43.37%
LLC LendLease Group Loans Granted 0.00 0.00 0.000 0.00%
LLC LendLease Group Loans Repaid 57,00,000.00 386,00,000.00 -329,00,000.000 -85.23%
LLC LendLease Group Other Investing Cashflows 0.00 0.00 0.000 0.00%
LLC LendLease Group Net Investing Cashflows 701,00,000.00 6,00,000.00 695,00,000.000 11583.33%
LLC LendLease Group Proceeds from Issues 1065,00,000.00 0.00 1065,00,000.000 0.00%
LLC LendLease Group Proceeds from Borrowings 28006,00,000.00 53276,00,000.00 -25270,00,000.000 -47.43%
LLC LendLease Group Repayment of Borrowings -25768,00,000.00 -56260,00,000.00 30492,00,000.000 -54.20%
LLC LendLease Group Dividends Paid -3379,00,000.00 -2932,00,000.00 -447,00,000.000 15.25%
LLC LendLease Group Other Financing Cashflows 161,00,000.00 -288,00,000.00 449,00,000.000 -155.90%
LLC LendLease Group Net Financing Cashflows 85,00,000.00 -6204,00,000.00 6289,00,000.000 -101.37%
LLC LendLease Group Net Increase in Cash 2246,00,000.00 2332,00,000.00 -86,00,000.000 -3.69%
LLC LendLease Group Cash at Beginning of Period 10084,00,000.00 7501,00,000.00 2583,00,000.000 34.44%
LLC LendLease Group Exchange Rate Adj 162,00,000.00 251,00,000.00 -89,00,000.000 -35.46%
LLC LendLease Group Other Cash Adjustments 0.00 0.00 0.000 0.00%
LLC LendLease Group Cash at End of Period 12492,00,000.00 10084,00,000.00 2408,00,000.000 23.88%
Figure 3: (Table showing Horizontal analysis of Cash flow Statement)
Source: (Created by Author)

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ACCOUNTING FOR FINANCIAL DECISION
ASX Code Company Name Item 06/17 06/16 $Movement %movement
LLC LendLease Group Net Profit Margin (%) 3.38 3.11 0.27 8.68%
LLC LendLease Group EBIT Margin (%) 5.46 4.93 0.53 10.75%
LLC LendLease Group EBITA Margin (%) 5.46 4.93 0.53 10.75%
LLC LendLease Group EBITDA Margin (%) 6.05 5.48 0.57 10.40%
LLC LendLease Group ROE (%) 9.23 8.32 0.91 10.94%
LLC LendLease Group ROA (%) 3.06 2.99 0.07 2.34%
LLC LendLease Group ROIC (%) -- -- 0.00 0.00%
LLC LendLease Group NOPLAT Margin (%) 3.79 3.62 0.17 4.70%
LLC LendLease Group Invested Capital Turnover -- -- 0.00 0.00%
LLC LendLease Group Inventory Turnover 7.70 7.81 -0.11 -1.44%
LLC LendLease Group Asset Turnover 0.79 0.81 -0.01 -1.66%
LLC LendLease Group LT Asset Turnover 1.14 1.18 -0.04 -3.74%
LLC LendLease Group PPE Turnover 38.90 34.74 4.16 11.98%
LLC LendLease Group Depreciation/PP&E (%) 23.06 19.13 3.93 20.54%
LLC LendLease Group Depreciation/Revenue (%) 0.59 0.55 0.04 7.27%
LLC LendLease Group Wkg Capital/Revenue (%) -32.79 -25.91 -6.88 26.55%
LLC LendLease Group Working Cap Turnover -3.05 -3.86 0.81 -20.98%
LLC LendLease Group Financial Leverage 3.38 3.31 0.07 2.13%
LLC LendLease Group Gross Gearing (D/E) (%) 35.27 37.84 -2.57 -6.79%
LLC LendLease Group Net Gearing (%) 15.02 19.88 -4.86 -24.45%
LLC LendLease Group Net Interest Cover 9.36 6.77 2.59 38.24%
LLC LendLease Group Current Ratio 0.58 0.66 -0.08 -12.32%
LLC LendLease Group Quick Ratio 0.38 0.45 -0.06 -14.33%
LLC LendLease Group Gross Debt/CF 2.97 3.53 -0.56 -15.81%
LLC LendLease Group Net Debt/CF 1.27 1.86 -0.59 -31.78%
LLC LendLease Group NTA per Share ($) 7.97 7.15 0.81 11.34%
LLC LendLease Group BV per Share ($) 10.39 9.64 0.75 7.80%
LLC LendLease Group Cash per Share ($) 2.14 1.73 0.41 23.62%
LLC LendLease Group Receivables/Op. Rev. (%) 7.49 7.69 -0.20 -2.60%
LLC LendLease Group Inventory/Trading Rev. (%) 12.99 12.80 0.19 1.48%
LLC LendLease Group Creditors/Op. Rev. (%) 33.68 28.82 4.86 16.86%
LLC LendLease Group Funds from Ops./EBITDA (%) 32.50 106.05 -73.55 -69.35%
LLC LendLease Group Depreciation/Capex (%) 61.26 46.25 15.01 32.45%
LLC LendLease Group Capex/Operating Rev. (%) 0.97 1.19 -0.22 -18.49%
LLC LendLease Group Days Inventory 47.42 46.74 0.68 1.46%
LLC LendLease Group Days Receivables 27.34 28.08 -0.74 -2.64%
LLC LendLease Group Days Payables 122.93 105.21 17.72 16.84%
LLC LendLease Group Gross CF per Share ($) 1.30 1.09 0.22 19.79%
LLC LendLease Group Sales per Share ($) 29.53 27.18 2.35 8.65%
LLC LendLease Group Year End Share Price 16.65 12.60 4.05 32.14%
LLC LendLease Group Market Cap. 97152,75,000.00 73369,80,000.00 23782,95,000.00 32.42%
LLC LendLease Group Net Debt 9260,00,000.00 11162,00,000.00 -1902,00,000.00 -17.04%
LLC LendLease Group Enterprise Value 106412,75,000.00 84531,80,000.00 21880,95,000.00 25.88%
LLC LendLease Group EV/EBITDA 10.61 10.26 0.35 3.41%
LLC LendLease Group EV/EBIT 11.76 11.41 0.36 3.13%
LLC LendLease Group Market Cap./Rep NPAT 12.81 10.51 2.30 21.84%
LLC LendLease Group Market Cap./Trading Rev. 0.59 0.49 0.10 20.04%
LLC LendLease Group Price/Book Value 1.58 1.31 0.27 20.57%
LLC LendLease Group Price/Gross Cash Flow 13.28 12.20 1.08 8.89%
LLC LendLease Group PER 16.70 14.91 1.79 11.98%
Figure 4: (Table showing Horizontal analysis of Ratio analysis)
Source: (Created by Author)

15
ACCOUNTING FOR FINANCIAL DECISION
Requirement c
Horizontal analysis is conducted to analysis the changes which takes place in the items of
the financial statements during particular periods. Horizontal analysis is conducted for the
purpose of comparing the trends and ratios of the financial statements over a certain period
(Iršová and Havránek 2013).
As per the profit and loss statement of the business, the rental expenses has significantly
increased over the year and the increase of more than 104.39% is seen from the previous year’s
figures. The increase is of a significant amount of $ 119,00,000. The net profit of the business
after tax has also significantly increased which shows that the business is improving and has
developed from previous year. The increase in percentage is about 19.85% and such increase is
due to increase in revenue generation of the business.
The total current asset of the business has increased which is a favorable sign as per the
balance sheet of the business. this signifies that the business has improved its liquidity situation.
The total asset of the business has also increase which is also a positive sign and the increase is
by 12.16% as shown in the balance sheet of the business. As per the cash flow statement, there is
a slight movement in the cash receipt of the business which is of 1.41% increase as depicted in
the statement. There has been a significant decrease in the net operating cash flows of the
business which suggest that the operational area of the business is facing certain problems. The
cash from investing activities have increased tremendously by 11583.33%.
Requirement (d)
The current ratio of the company has decreased from previous year which is shown to be
0.58 in 2017 and there is a decrease of 12.32% which suggest that the company might be facing

16
ACCOUNTING FOR FINANCIAL DECISION
liquidity issues which needs to be improved. The receivable period has decreased from the
estimates of 2016 which was 28.08 days and the same is shown in 2017 as 27.34 days. This a
favorable change and is consider appropriate for the business. The inventory turnover ratio of the
business has decreased from the previous year which signifies that the business is not doing well
in terms of inventory management. The similar unfavorable result is also noticed in inventory
days which is related to inventory turnover ratio and therefore the business is required to focus
and improve such an area. The net profit margin of the company has improved which is a
positive sign and considered as a financial indicator of the business (Delen, Kuzey and Uyar
2013). The same for 2017 is shown to be 3.38. The ROA of the business has improved slightly
depicting an increase of 2.34% which can be considered to be favorable (Weil, Schipper and
Francis 2013). The return on equity has improved considerably considering last years estimate
which shows that the business is looking after the needs of the shareholders. The interest
coverage ratio of the business has also increased which suggest that the business is appropriately
servicing the debts which are taken by the business.
Conclusion
In an overall analysis of the financial ratios and the trends in the business, it can be said
that the business is performing moderately well in comparison to previous year. However, the
business needs to improve its liquidity position and also pay attention to the inventory
management of the business which are a crucial part of the business. If the business can manage
the inventory and liquidity issues properly it will be able to generate more revenues and cash
inflows.

17
ACCOUNTING FOR FINANCIAL DECISION
Reference
Delen, D., Kuzey, C. and Uyar, A., 2013. Measuring firm performance using financial ratios: A
decision tree approach. Expert Systems with Applications, 40(10), pp.3970-3983.
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