Financial Statement Analysis Report: Gatsby Grange Company, UK

This report presents a financial analysis of Gatsby Grange, a UK-based boutique chain. It focuses on ratio analysis, specifically profitability, liquidity, and gearing ratios, using data from 2018 and 2019. The analysis includes calculations, interpretations, and the use of graphs to illustrate financial performance. The report concludes that Gatsby Grange's profitability is average, while its liquidity position is poor due to insufficient current assets. The gearing ratio indicates an average performance. The report suggests that the company should reduce expenses and focus on increasing current assets to improve liquidity. The report also includes references to relevant academic sources. This assignment is valuable for students looking to understand financial statement analysis and ratio calculations.

Title
ANALYSIS OF FINANCIAL STATEMENT

INTRODUCTION
A corporate enterprise aims to achieve its goals by collecting funds through
multiple sources and afterwards investing these in multiple assets classes such
as plants, land and buildings, equipment and other tangible assets. Financial
accounting is using quantitative decision-making to handle finance. The study
comprises ratio analysis of Gatsby Grange that is popular Boutique chain of
UK and Northern Ireland. As well as this power point presentation is based on
analysis of content mentioned in report and conclusion.

CONTENT
The main part of report is based on calculation and analysis of ratios of
Gatsby Grange company. In the first task of report, three types of ratios are
calculated and interpreted which are Profitability ratio, liquidity ratio and
gearing ratio. In order to do proper ratio analysis, different kinds of graphs
have been used to present financial performance more effective. Along with
this task includes information about importance of ratio analysis and its
weakness.

CONCLUSION
From different parts of report this can be concluded that ratio analysis is one of
the key term which needs to be applied by companies in order to evaluate their
financial performance. From part A of task one, this can be concluded that:
 Profitability ratio- In terms of profitability, performance of company is
average. This is so because ratios are presenting a common outcome.
Herein, this is important to note that company’s performance was better in
year 2018 which dropped in next year 2019.

CONTINUE
 Liquidity ratio- Under it, two types of ratios are computed which are
current and quick ratio. From above done analysis, it can be concluded that
liquidity position of company is too bad. This is so because both liquidity
ratios are showing negative outcome because outcome is lower than ideal
form of ratio. In addition, to this it can be articulated that reason of poor
liquidity position is lower current assets to make payment of short term
debts or current liabilities.

CONTINUE
 Gearing ratio- In terms of this ratio, company’s performance is average
because debt to equity ratio is lower than expectation. While debt ratio is
higher for both years 2018 and 2019. It is so because company has enough
amount of assets to pay their debts. On the other hands, they do not have
enough equity to pay their debts.

SUGGESTIONS
On the basis of above conclusion, it can be suggested to Gatsby Grange company’s manager
and owner that they should try to minimize overall expenses because due to higher amount
of expenditures, they are unable to gain higher net profit and gross margin. In order to
enhance liquidity position, finance manager of company should focus on raising the amount
of current assets so that they can have enough amount of fund to make payment of short
term debts. This can be done only if company will focus on generating own funds rather
than to depend on loans.

REFERENCES
Bebu, I. and Lachin, J.M., 2016. Large sample inference for a win ratio
analysis of a composite outcome based on prioritized
components. Biostatistics, 17(1), pp.178-187.
Uchide, T. and Imanishi, K., 2016. Small earthquakes deviate from the
omega‐square model as revealed by multiple spectral ratio analysis. Bulletin
of the Seismological Society of America, 106(3), pp.1357-1363.