Accounting for Business

Accounting for Business

Contents
Business Law.................................................................................................................................1
Introduction....................................................................................................................................3
Part A financial ratios and financial statement analysis..........................................................4
a)..................................................................................................................................................4
b)..................................................................................................................................................8
Part B Income and revenue.........................................................................................................9
Part C Comparing Balance sheet.............................................................................................10
a)................................................................................................................................................10
b)................................................................................................................................................10
c)................................................................................................................................................10
References...................................................................................................................................11

Introduction
The term finance is considered to be one of the most important term that helps the
business organisation to achieve the objective of maximising the performance of the
company. This is considered to be the important term for the company as this helps
them to analyse the financial performance of the company and through this the
company can compare the standards with the other companies so as to make the
different plans to maximise the performance of the company. The accounting is one of
the process that helps the company to record the transactions in the books of accounts
of the company which helps them to participate and finance the structure so as to
achieve the objective of the disclosure to the users of the same (Alstadsæter, et. al.,
2016). This assignment is based on the ratios of the company and the solvency issue
that the company is facing. Also the different operating activities that the company is
entered into are considered for the purpose. Also for the purpose of achieving the
objective of purchasing the running business the analysis of the balance sheet of both
the companies are done.

Part A financial ratios and financial statement analysis
a)
There are various ratios which has been specified so as to achieve the analysis of
financial performance of the company. Hence for this purpose various ratios are
considered for this purpose.
 Current ratio: In order to pay the short term liabilities of the business enterprise
the current ratio is required by the company. It is seen that the every business
organisation has short term obligations which has to be paid off and this
obligation is termed as current liabilities. This is liquidity ratio that helps the
business to assess the current assets so as to pay off the short term obligations
of the company.
Current ratio = Current Assets/Current Liabilities
Current ratio (2018) = Cash+ Account receivable+ inventory/ current Liabilities
= 12000+60000+150000/81000
= 2.74:1
Current ratio (2019) = Cash+ Account receivable+ inventory/ current Liabilities
= 18000+70000+130000/105000
= 2.08:1