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BUACC5930 : Accounting Concepts and Practices Assignment

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BUACC5930 - Accounting Concepts and Practices (BUACC5930)

   

Added on  2020-05-16

BUACC5930 : Accounting Concepts and Practices Assignment

   

BUACC5930 - Accounting Concepts and Practices (BUACC5930)

   Added on 2020-05-16

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Running head: ACCOUNTING CONCEPTS AND PRACTICESAccounting Concepts and PracticesName of the Student:Name of the University:Author’s Note:Course ID:
BUACC5930 : Accounting Concepts and Practices Assignment_1
1ACCOUNTING CONCEPTS AND PRACTICESTable of ContentsQuestion 1:.......................................................................................................................................2Question 2:.......................................................................................................................................8Question 3:.....................................................................................................................................10Part A:........................................................................................................................................10Part C:........................................................................................................................................13Part D:........................................................................................................................................15References:....................................................................................................................................17
BUACC5930 : Accounting Concepts and Practices Assignment_2
2ACCOUNTING CONCEPTS AND PRACTICESQuestion 1:For conducting the financial analysis of Coles for the years 2016 and 2017, the financialratios have been used to evaluate its financial performance. The following financial ratios areused to compare the financial position and performance of Coles:Profitability analysis:Profitability Ratios:-ParticularsDetails20162017RevenueA 65,981 68,444 Net incomeB 407 2,873 Operating incomeC 1,346 4,402 Total assetsD 40,783 40,115 Current liabilitiesE 10,424 10,417 Net marginB/A0.62%4.20%Return on capital employed (ROCE)C/(D-E)4.43%14.82%According to the above table, it could be stated that the net margin of the organisation hasincreased from 0.62% in 2016 to 4.20% in 2017. As commented by Cooper, Ezzamel & Qu(2017), the net margin denotes the percentage of profit that an organisation earns after it hasincurred all its expenses and taxes from the revenue made. The higher the percentage, the better
BUACC5930 : Accounting Concepts and Practices Assignment_3
3ACCOUNTING CONCEPTS AND PRACTICESis the position of the organisation in the operating market. In case of Coles, the trend isincreasing, which denotes that the organisation has improved its performance in 2017 mainly dueto reduced amount in impairment expenses. The similar trend is observed in case of ROCE, as it has increased to 14.82% in 2017from 4.43% in 2016 (Wesfarmers.com.au, 2018).A higher ratio is always favourable, since itdenotes the efficiency of the firm in generating higher returns from the invested amount. In thiscase, the ratio has increased for Coles mainly due to increase in operating income and fall incurrent liabilities. Hence, from the profitability point of view, Coles has shown improvedperformance in 2017. Liquidity analysis:Liquidity Ratios:-ParticularsDetails20162017Current assetsA 9,684 9,667 InventoriesB 6,260 6,530 Current liabilitiesC 10,424 10,417 Current ratioA/C 0.93 0.93 Quick ratio(A-B)/C 0.33 0.30 Based on the above table, it could be found that the current ratio of Coles has remainedthe same at 0.93 in 2016 and 2017. An ideal current ratio in the Australian retail industry isconsidered as 2 (Crawford, 2016). In this case, the ratio is well below the stated ideal standard,which denotes that the organisation is struggling to meet its current obligations with the availableshort-term asset base. Quick ratio is considered as the advanced liquidity ratio, since it does notconsider the value of inventory in assessing the liquidity position of a firm (Edmonds et al.,2016).In case of Coles, the quick ratio has fallen from 0.33 in 2016 to 0.30 in 2017. An ideal
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