Assessing Financial Performance of Outdoor Adventures

This report assesses the financial performance of Outdoor Adventures and provides recommendations to improve efficiency and profitability. Includes a Diagonal Flow Diagram to improve the revenue cycle for accounts receivable.

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Accounting Systems
Name of the Student
Name of the University
Authors Note
Course ID

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Executive Summary:
The report will be based on assessing the financial performance of Outdoor Adventures. The
primary area of focus will be on increasing the profitability for Outdoor Adventures based on
the segmental performance. The report will also include 0 level Diagonal Flow Diagram to
improve the current system of revenue cycle for the accounts receivable procedure.
Additionally, the report will include recommendations to improve the efficiency of Outdoor
Adventures. Special focus will be paid on managing the costs and improving the turnover of
Outdoor Adventures.

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Table of Contents
Part A.........................................................................................................................................4
Introduction:...............................................................................................................................4
Answer to question 1:.................................................................................................................4
Conclusion:................................................................................................................................6
....................................................................................................................................................7
Part B- DFD Model....................................................................................................................7
Reference List:...........................................................................................................................8

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Part A
Introduction:
The report will be addressing the current situation of Outdoor Adventures with detail
assessment of the profit situation for the company. The study also includes the segmental
performance for Outdoor Adventures and understanding the profitability for each of the
section. A circular flow diagram will also accompany to improve the efficiency of the firm in
the areas of accounts receivable.
Answer to question 1:
The business is report is aimed to providing the outdoor Adventures a detailed assessment
of the profits generated by the business during the year ended 31 March 2018. As evident the
sales revenue from the accessories stood 54,582 whereas the revenue from clothing during
the month of march stood 18,183. The total amount of revenue for the company stood 72,726.
The total cost of sales incurred stood 23680 and net profit for the Outdoor Adventures stood
49,085.
Gauging into the balance sheet of Outdoor Adventures total asset for the firm stood
173,612 whereas the total liabilities for the firm stood 49,527. The net asset for the firm stood
124,085. Considering the performance of the business an assertion can be bought forward by
stating the segmental revenue from sale of clothing stood 18,183 and also incurred a higher
cost of sales in the clothing segment to 49,085. The business also has considerable amount of
cost of goods sold reported in the statement of profit and loss account impacting the
profitability of clothing segment.
Specific recommendations can be provided to improve the profitability of Outdoor
Adventures. The key areas include

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a. Managing the costs
b. increasing the turnover
c. increasing the productivity
d. increasing the efficiency and,
e. concentrating on sales efforts
Managing cost: It is recommended that Andrew and Stephanie should keep a close
management of the business cost as this will help in driving profitability. Key actions such as
negotiating with suppliers can help in sealing better deals (Van Der Aalst, 2016).
Additionally, it is recommended that Andrew and Stephanie should make use of Just in Time
basis to make an effective use of the capital. Andrew and Stephanie should use the activity
based costing in an effective manner to uncover the real costs of specific business activities.
Increasing turnover: Pricing helps in effecting the profitability and the form of customers
that it can sell to make a big difference in revenue. Additionally, it is recommended that to
increase the profitability Outdoor Adventures should consider cross selling by analysing what
the customer purchase and should offer complementary products (Mathuva, 2015). By
identifying the needs and developing the new products and services the business will be able
to diversify the products and services to meet the developing needs of the customers.
Increasing productivity: Andrew and Stephanie can reduce the cost of goods sold and may
remain competitive. This will them in measuring the operational efficiency on the ongoing
basis. Both Andrew and Stephanie can communicate their productivity targets and
measurement which will enable the staff to aim at certain level of productivity.
Increasing the efficiency: One of the clearest way of increasing the profitability of Outdoor
Adventures is to buy more effectively. It would make sense how Andrew and Stephanie

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regularly view their supplier base (Prasad & Green, 2015). If Andrew and Stephanie are able
to purchase raw materials more cheaply, they can try to maintain the quality at the same time.
Concentration on Sales Effort: Recommendations can be provided to increase profitability
in two ways; selling more products to the existing customers and finding identical customers
to sale. It would make sense for Andrew and Stephanie to encourage the customers that
generate higher sales and higher profitability (Du et al., 2015). Andrew and Stephanie can
also considerably increase their profitability by nurturing those customers that provide higher
profit from lower sales.
Therefore, the above recommendations would help increasing the profitability and
efficiency of Outdoor Adventures.
Conclusion:
On arriving at the conclusion it is understood that clothing department of outdoor
adventures incurred higher cost of sales. Additionally, a considerable amount of cost of goods
sold reported by the firm that has impacted the profitability of the organization. On a
conclusive note the report has provided recommendations in the area of increasing turnover
by considering the tools of cross selling and providing discount to the customers. The
business should incorporate operational efficiency on the ongoing basis for improving the
efficiency of business.

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Order Processing System
Inventory Control
Department
Customer
Warehouse
Customer
Accounting
Departments
Customer Order
Back Ordered Items
Shipped Orders
Customer Billing
Statement
Item Information
Order Picking List
Order Goods
Account Receivable Report
Item number or Description
New
Customer
Information
Part B- DFD Model

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Reference List:
Du, K., Huddart, S., & Xue, L. (2015). Accounting Information Systems and Asset Prices.
Mathuva, D. (2015). The Influence of working capital management components on corporate
profitability.
Prasad, A., & Green, P. (2015). Organizational competencies and dynamic accounting
information system capability: impact on AIS processes and firm
performance. Journal of Information Systems, 29(3), 123-149.
Van Der Aalst, W. M., La Rosa, M., & Santoro, F. M. (2016). Business process management.