Financial Performance Analysis Accounting Report for 2020

This accounting report analyzes the financial performance of a company. It includes an income statement, a statement of owner's equity, and an analysis of goals achievement. The income statement covers the period ending July 31, 2020, and details sales, cost of goods sold, gross profit, operating expenses, interest income, interest expense, and net income/loss. The statement of owner's equity shows the capital account, drawings, and the impact of the net loss. The report assesses the achievement of the gross margin and net income margin targets, revealing that the company did not meet its goals, and the gross margin was 14.43% and the net income margin was -23.08%. The report highlights the need for expense analysis and strategic planning to improve profitability and achieve future goals. The report also provides a list of references and an appendix.

1
Accounting

2
Table of Contents
Income statement.......................................................................................................................3
Statement of owner’s equity.......................................................................................................3
Goals achievement.....................................................................................................................3
References..................................................................................................................................5
Appendix....................................................................................................................................6

3
Income statement
Income statement for the year ending 31st July 2020
Particulars Amount
Sales 1714400
Cost of goods sold:
Opening stock 785000
Add: purchases 1306000
Less: closing stock 624000 1467000
Gross profit 247400
Operating
expenses:
General expenses 305250
Selling expenses 319750 625000
EBIT -377600
Interest income 2150
Interest expense 20200 -18050
Net income/(loss) -395650
Statement of owner’s equity
Particulars Amount
Capital account (R. Hard rock) 953400
Less: Drawings 101300
Less: Net loss -395650
Capital account closing balance 456450
Goals achievement
Gross margin: This is the ratio that shows the gross profit as a percentage of sales which is
made (Batchimeg, 2017). The company has set the goal of 31.5% for the gross margin which
shall be attained. To identify the performance calculation will be made which is as follows:
Gross margin = Gross profit/sales *100
= 247400/1714400
= 14.43%
It can be noted that the target is not met and there is a gross margin of 14.43% which is
maintained.

4
Net income margin: This is the percentage of the net return and sales which are made during
a specific period (Delen et al., 2013). For this the net profit is divided by sales of the
company and the calculation is shown hereunder:
Net income margin = -395650/1714400
= -23.08%
The company has made a loss instead of profits and so the target is not met.
It can be said that the improvements will be required to be made by the company in order to
attain the target. The expenses which are incurred will be required to be analyzed and then
the plan will be made by which the same can be reduced. This will be helping the company in
decreasing the amount of expenses and the overall profitability will be improved with that
and that will help in achieving the set goals in the coming period.

5
References
Batchimeg, Bayaraa. "Financial performance determinants of organizations: The case of
Mongolian companies." Journal of competitiveness 9, no. 3 (2017): 22.
Delen, Dursun, Cemil Kuzey, and Ali Uyar. "Measuring firm performance using financial
ratios: A decision tree approach." Expert Systems with Applications 40, no. 10 (2013): 3970-
3983.

6
Appendix