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Accounting for Decision Making PDF

Added on - 08 Dec 2020

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Accounting for decisionmaking
TABLE OF CONTENTS1. INTRODUCTION.......................................................................................................................12.BACKGROUND..........................................................................................................................13. FINANCIAL PERFORMANCE ANALYSIS.............................................................................13.1 Horizontal analysis...........................................................................................................13.2 Trend / Vertical analysis...................................................................................................13.3 Ratio analysis....................................................................................................................24. QUALITATIVE ANALYSIS....................................................................................................115. BUSINESS AND GROWTH STRATEGY..............................................................................126. DISADVANTAGES OF RATIO AND TREND ANALYSIS..................................................13CONCLUSION..............................................................................................................................14REFERENCES..............................................................................................................................15APPENDIX....................................................................................................................................161. Ratio analysis of Tiffany & Co........................................................................................162. Horizontal analysis of income statement..........................................................................203. Horizontal analysis of balance sheet................................................................................214. Vertical analysis of income statement..............................................................................245. Vertical analysis of balance sheet.....................................................................................25
1. INTRODUCTIONFinancial accounting in relation with management accounting assist in making decisions regarding the allocation of resourcesand generating profits. It helps business in maintaining the record of the financial transactions and enables in ascertaining theprofitability and financial position of the business (Williams and Dobelman, 2017). It also analyses the credibility, solvency andliquidity of the company that leads to an effective decision making about the distribution of the funds in the various investmentchannels so that huge funds can be generated. Further the report includes the background and aim of the company and financial ratiosand trend analysis of the organisation. It also describes the growth strategy and the limitations of the ratio and trend analysis.2.BACKGROUNDThe present study is based on Tiffany & co. which is an American company deals in the jewellery, china crystal, watches,accessories and sterling silver headquartered in New york city. Further, such business is also listed on London Stock exchange withthe motive to attract more funds and investors. It is Well-known for its luxury and speciality in diamonds and operates worldwide(Liu, and et.al., 2019). Its market itself has the style, taste and unique in terms of its gems and jewellery.3. FINANCIAL PERFORMANCE ANALYSIS3.1 Horizontal analysisIncome statementRefer to appendix 2.Balance sheetRefer to appendix 3.3.2 Trend / Vertical analysisIncome statementRefer to appendix 4.1
3.3 Ratio analysisProfitability ratiosParticulars2015201620172018GP ratio59.70%60.69%62.23%62.47%NP ratio11.39%11.30%11.15%8.88%2
Liquidity ratio analysisParticulars2015201620172018Current ratio5.334.815.655.50Quick ratio1.741.761.922.103
4
% change in revenueParticulars20172018%changeinrevenueSalesrevenue4001.84169.84.20%Gearing or debt-equity ratioParticulars2015201620172018Gearing ratio0.310.270.290.275
Inventory turnover ratioParticulars2015201620172018Inventoryturnoverratio0.730.730.700.696
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