Managing Financial Resources Solved Assignment
Added on 2021-02-18
11 Pages2910 Words16 Views
Managing FinancialResources
Table of ContentsINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................1A) Calculation of financial ratios for DeBrun Ltd and McGill Ltd............................................1B) Recommendation to Dipapa over investment choice.............................................................5TASK 2............................................................................................................................................6A) Preparation of Job cost Statement for Job No 21...................................................................6B) Advice to financial mangers over acceptance or rejection of the quotation.........................7CONCLUSION................................................................................................................................7REFERENCES................................................................................................................................8
INTRODUCTIONThe 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 thisthe current, past and competitor's performance of the firm is also compared that states at whatlevel the entity is performing. In the present report this analysis is carried out for two firmsDeBrun Ltd and McGill Ltd. For both organisation various types of ration is calculated and onbasis of them recommendation in made to Dipapa Ltd for investing in any one of the firm. Alongwith this job cost statement for a given job is done and over this Dipapa is suggested onwhether to accept the quotation or not.TASK 1A) Calculation of financial ratios for DeBrun Ltd and McGill LtdGross profit RatioParticularDebrun LtdMcGill LtdGross margin44403580Sales proceeds1516012260Gross profit ratio(Gross margin/Sales)*10029.3%29.2%Return ion capital employedEBIT22801960Total Assets1642011380Current Liability30401440Capital employedTotal Assets – CurrentLiability133809940Return on capitalemployedNet operating profit/Equity + non-currentliabilities)17.04%19.72%Return on equityProfit after taxation13201440Equity share capital98809440Net wealthequity share capital +988094401
Reserves and surplusReturn on EquityProfit after tax/Shareholders equity 13.36%15.25%Inventory turnover (in times)COGS107208680Average Inventory15801260Stock turnover ratio Closing stock / cost ofsales * 3651580 / 10720 * 365 =54 days 1260 / 8680 * 365 = 53days Accounts Receivables collection period (in days)Accounts receivable17201360Net sales15160.0012260.00Accounts ReceivablesCollection PeriodAccountsreceivable*365/ (Netsales)41 days 40 daysAccounts Payable settlement period (in days)COGS107208680Trade payables1920.00960.00Creditors paymentperiod(365 * AccountsPayables) / Cost ofsales65 days 40 daysQuick ratioCurrent Asset33002900Current Liability30401440Inventory15801260Quick assetCurrent Asset –(Inventories+ prepaidexpenses)17201640Quick ratio(Current asset-Inventory)/CurrentLiability0.571.14Interest cover ratio1
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