This presentation provides an analysis of the financial statement of Gatsby Grange, a popular boutique chain in the UK and Northern Ireland. It includes ratio analysis, graphs, and conclusions about profitability, liquidity, and gearing ratios.
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Title ANALYSIS OF FINANCIAL STATEMENT
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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.
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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.
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REFERENCES Bebu, I. and Lachin, J.M., 2016. Large sample inference for a win ratio analysisofacompositeoutcomebasedonprioritized 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.