Managing Financial Resources Assignment Sample

Managing Financial
Resources

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
A) Calculation of financial ratios for DeBrun Ltd and McGill Ltd............................................1
B) Recommendation to Dipapa over investment choice.............................................................5
TASK 2............................................................................................................................................6
A) Preparation of Job cost Statement for Job No 21...................................................................6
B) Advice to financial mangers over acceptance or rejection of the quotation.........................7
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
The financial performance of an organization is evaluated with financial ratio analysis.
This is considers as the best tool that interpreter the exact fiscal position of a business. With this
the current, past and competitor's performance of the firm is also compared that states at what
level the entity is performing. In the present report this analysis is carried out for two firms
DeBrun Ltd and McGill Ltd. For both organisation various types of ration is calculated and on
basis of them recommendation in made to Dipapa Ltd for investing in any one of the firm. Along
with this job cost statement for a given job is done and over this Dipapa is suggested on
whether to accept the quotation or not.
TASK 1
A) Calculation of financial ratios for DeBrun Ltd and McGill Ltd
Gross profit Ratio
Particular Debrun Ltd McGill Ltd
Gross margin 4440 3580
Sales proceeds 15160 12260
Gross profit ratio (Gross margin/
Sales)*100
29.3% 29.2%
Return ion capital employed
EBIT 2280 1960
Total Assets 16420 11380
Current Liability 3040 1440
Capital employed Total Assets – Current
Liability
13380 9940
Return on capital
employed
Net operating profit/
Equity + non-current
liabilities)
17.04% 19.72%
1

Return on equity
Profit after taxation 1320 1440
Equity share capital 9880 9440
Net wealth equity share capital +
Reserves and surplus
9880 9440
Return on Equity Profit after tax/
Shareholders equity
13.36% 15.25%
Inventory turnover (in times)
COGS 10720 8680
Average Inventory 1580 1260
Stock turnover ratio Closing stock / cost of
sales * 365
1580 / 10720 * 365 =
54 days
1260 / 8680 * 365 = 53
days
Accounts Receivables collection period (in days)
Accounts receivable 1720 1360
Net sales 15160.00 12260.00
Accounts Receivables
Collection Period
Accounts
receivable*365/ (Net
sales)
41 days 40 days
Accounts Payable settlement period (in days)
COGS 10720 8680
Trade payables 1920.00 960.00
Creditors payment
period
(365 * Accounts
Payables) / Cost of
sales
65 days 40 days
Quick ratio
1