Accounting Policies of NCX organization : Report

Added on - 22 Jul 2020

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TABLE OF CONTENTS1.......................................................................................................................................................12.......................................................................................................................................................13.......................................................................................................................................................24.......................................................................................................................................................25.......................................................................................................................................................2
1The accounting policies of both organizations are effective. The accounting policies of NCXorganization are related to taxation such as GST (Goods and Services Tax). The net amount ofGST recoverable from or payable to government is included as a part of receivables or payablesin the financial statements. Moreover, commitments and contingencies are disclosed net ofamount payable of GST to taxation department. However, FAN has different accountingpolicies. Auditors are important persons in both the companies as they have reflected true andfair position of organizations in a better way. The financial period of NCX is ended on June ofevery year and that of other company is ended on annual basis on March every year. Financialperiod plays an important role as the financial position of them are reflected and is essential tocheck its growth and expansion of activities throughout the period.2Asset turnover:Asset turnover ratio value is 2.93 for FAN and same is 1.86 for NCX andit can be said that former firm is making best use of asset to generate sales then latterfirm.Gross margin:Gross margin of FAN is 44% and same for NCX is 61%. This reflevt thatNCX have strong curb on expenditure then FAN.Current ratio:Current ratio value is 1.88 for FAN and same is 1.57 for NCX. It can besaid that liquidity position FAN is better then NCX.Quick ratio:Quick ratio value is 0.54 for FAN and same is 0.92 for NCX which meansthat liquidity position of letter firm is better the former firm.A/R turnover:A/R turnover value is 104 for FAN and for NCX its value is 940. Thismeans that FAN generate 104 times sales by using receivables then NCX which generatesales 940 times. It can be said that FAN is in better condition then NCX.A/R days:FAN cover receivable in 3.50 days and NCX cover it is 0.39 days which is 1day. Cash management strategy of NCX is better then FAN.Inventory turnover:Inventory turnover ratio value is 3.34 for FAN and same for NCX is3.18. FAN relative to NCX is quickly converting inventory in to sales.A/P turnover:FAN make credit purchase 8 times in year and same is 2.31 in case ofNCX. Hence, NCX cash availability condition is better.1|P a g e
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