Financial Statement Analysis and Ratio Evaluation for ABC Real Estate

This report provides a comprehensive financial analysis of ABC Real Estate. It begins with a variance analysis, comparing budgeted and actual income, and explaining variances in sales commissions, property management fees, letting fees, and auction fees. The report then constructs profit and loss statements and balance sheets, adhering to accounting principles. A significant portion is dedicated to the calculation and interpretation of financial ratios, including current ratio, working capital, contribution margin ratio, net profit ratio, return on equity, and debt-to-equity ratios. These ratios are used to assess the firm's liquidity, profitability, and leverage. The analysis concludes with recommendations for improving financial performance, such as enhancing short-term assets to meet industry benchmarks and managing debt levels for sound solvency. The report highlights the company's good profitability but suggests improvements in liquidity and leverage.