Managerial Accounting Report: Trion Corporation Analysis

This managerial accounting report analyzes the financial performance of the Trion Corporation, a manufacturing company with six operating divisions. The analysis focuses on divisional profitability, market share, and the application of ratio analysis to assess financial leverage, liquidity, and return on assets and equity. The report evaluates the performance of the bathroom accessories and pipes divisions, highlighting their profitability and financial viability. It considers factors affecting capital budgeting decisions, such as initial investment and cash flows, and discusses the decentralization of head office staff for operational efficiency. The study assesses the company's financial position through ratio analysis, including operating profit margin, return on total assets, and return on equity. Strategic decisions, such as improving operational efficiency and market share, are recommended, especially for underperforming divisions. The report concludes with recommendations for improved financial performance and sustainable profitability, considering the impact of competition and operational costs.

Running head: MANAGERIAL ACCOUNTING
Managerial Accounting
Name of the Student:
Name of the University:
Author’s Note:

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Executive Summary
The assignment aims at analysing the Trion Corporation and the various
operational divisions of the company. The analysis of the company for the
various operational division was done by taking the revenue generated
and the profitability from each of the division for assessing the financial
viability of the divisions. The application of ratio analysis was done for the
analysis of the company where the financial leverage or the leverage of
the company were assessed. The importance and the relevance of the
ratio analysis for evaluating the financial performance of the company
was taken into consideration for the company. Both the bathroom
accessories divisions and the pipes division will be analysed based on the
profitability and financial viability of the divisions. There are various
factors that affects the capital budgeting decisions of the company like
the initial cost or investment into the project and the cash expected cash
flows from the project. Decentralisation of the head office staff for bring
operational efficiency in the daily workings of the company was also taken
into consideration. The importance and the exposure of the financial
leverage of the company was taken into account for the purpose of
discussion of the financial performance of the company.

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Table of Contents
Introduction.................................................................................................3
Discussion...................................................................................................3
a) Evaluation of Various Divisions............................................................3
b) Strategic Decisions..............................................................................6
c) Financial Gearing.................................................................................7
d) Decentralize Program..........................................................................9
Conclusion.................................................................................................10
References................................................................................................12
Appendix...................................................................................................14

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Introduction
The financial analysis of the Triton Company primarily engaged in
the manufacturing activities was taken into consideration for the analysis
of the various divisions of the company. With the growth of the level of
the competition under which the operations of the company is based
needs to be analysed depending upon the performance of the various
divisions of the company. The analysis of the various divisions of the
company was done based on the return generated by each of the
divisions (Williams and Dobelman 2017). There are in total of six divisions
for the company that will be analysed based on the sales generated in
each of them in correspondence to the level of expenses and profitability
share of each of the divisions. Business risk and financial risk are some of
the key risk associated with the company the same has been taken into
consideration for the purpose of the analysis (Vogel 2014). High level of
debt increases the financial risk associated with the company and it is
optimal for the company to have an optimal level of debt in the company.
There are various factors that affects the capital budgeting decisions of
the company like the initial cost/ investment into the project and the cash
expected cash flows from the project (Burns and Walker 2015). The
importance and the relevance of the ratio analysis for evaluating the
financial performance of the company was taken into consideration for the
company. Decentralisation of the head office staff for bring operational
efficiency in the daily workings of the company was also taken into
consideration. As a going concern it is very important to review the
performance of the company and the various aspects of the operations of
the company (Blum and Dacorogna 2014). For the long-term viability of
the project it is important for the company to make a strategic decision in
the context of the operational performance of the company. The
importance and the exposure of the financial leverage of the company
was taken into account for the purpose of discussion of the financial
performance of the company (Post and Byron 2015). Various quantitative

4MANAGERIAL ACCOUNTING
assessment tools like ratio analysis in the field of profitability, liquidity and
leverage was undertaken for the purpose of analysis of the company.
Discussion
a) Evaluation of Various Divisions
Triton Corporation has in total of six operating divisions for the
company wherein each of the operating divisions will be analysed base on
the return generated from them and the contribution provided in the
profitability of the company (Forsgren and Johanson 2014). The Electrical
Products Company is having the highest number of market share where
the revenue of the division has been the highest but the profitability of the
division has not been well in comparison to other divisions (Amrina and
Vilsi 2015).
1) Bathroom Accessories
Explain: Sales for the division has been around $7.0 MN, cost of
sales for the company has been around 6.5 MN and the net
profitability of division of the company has been around 0.5 MN.
The profitability generated from the Bathroom Accessories services
has been 7.14%, which is the operating profit margin of the division.
The division had a sound return while return on the total asset
generated from the division was just around 0.50%. The market
share of the division on the other hand was not significant with only
around 8% to be the total market share that was occupied by the
division (Deming 2018).
2) Industrial Services
Explain: The Industrial service of the company has reported a profit
of around 23.74% that stands the highest among the other divisions
of the company. The division did not have the highest revenue but
due to lower operational cost and various expenses related to the
division is relatively low which marks the high amount of profitability
from the division. The division contributed significantly in the overall
profitability of the company. The market share occupied by the
company was also significant at around 25% of the total market

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share that was captured by the Industrial division of the company
(Tsay 2014).
3) Car Accessories
Explain: The division also has a sound profit with around $3 MN to
be the reported profitability of the company. The division has a
profitability of around 17.54% in the current year, which was the
second highest contributor of the overall profitability of the
company. The market share of this division of this company was
also sound with around 30% to be the overall market share that is
captured by the Car Accessories divisions (Afonso, Baxa and Slavík
2018).
4) Floor Boards
Explain: The division reported around 5.51% of the profitability in
the current year, which was not as high as other division the same
has been due to higher operating cost associated with this divisions.
The division in spite of 27% of the market share has not been able
to deliver better returns in the overall profitability of the company
(Cadle, Paul and Turner 2014).
5) Electrical Products
Explain: The electrical product division reported around 5.50% that
turned out to be poor performing division of the company. The
division had the highest amount of reported revenue in the current
fiscal year but the higher cost associated with the company in the
form of higher material cost has degraded the overall profitability of
the company. The company did also have a significant market share
of around 40% in the market but could not deliver higher return due
to operational inefficiencies and higher cost of operation associated
with the company division (Quinlan et al. 2019).
6) Pipes Division
Explain: The pipes division of the company reported around 0.1
million of profitability and an operating profit margin of around
1.67%, which has been the worst among other division. Significant
amount of operational cost associated with the division and lower

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market share was the key reason for having such a lower
profitability. The company did not have a significant market share
as it had only had around 3% of the total market share (Fleisher and
Bensoussan 2015).
Ratio Analysis of Triton Corporation
Particulars
Electrical
Products
Floor
Boards
Car
Accessories
Industrial
Services
Bathroom
Accessories Pipes
Operating Profit 2.2 1.4 3 8 0.5 0.1
Net Sales 40 25.4 17.1 33.7 7 6
Operating Profit Margin 5.50% 5.51% 17.54% 23.74% 7.14% 1.67%
Market Share 40% 27% 30% 25% 8% 3%
Working Capital
The working capital for the company will be calculated based on the
net amount remaining with the company after deducting the current
liabilities from the current assets of the company. The division that would
be requiring a significant working capital investment would be the
Electrical Product division and the Floor Board Davison where the
company is having a significant market share but the increasing cost of
operation is affecting the overall profitability of the divisions. On an
overall basis, the company had a net working capital of around 15 million
where the company is having a significant amount of current assets for
paying off the current obligations of the company.
Financial Position
The financial position of the company was evaluated with the help of
the ratio analysis as an quantitative assessment tool for the company that
will be helping in assessing the overall operations of the company.
 Operating Profit Margin: The operating profit margin shows the
percentage of profit the company is able to make prior to payment
to interest and taxes. The operating profit margin of the company is
calculated by taking the operating income of the company divided

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by the net sales of the company. The operating profit margin of the
company was around 12.3%, which is sound for the company.
 Return on Total Assets: The return shows the level of profitability
earned on total assets for the company. The return on total assets
for the company was calculated by taking the Net Income/ Total
Assets. The return on total assets of the company was around
15.1% for the company showing that the assets of the company are
well utilized by the management of the company (Pilbeam 2018).
 Return on Equity: The return on equity for the company was
calculated by taking the net income divided by the total
shareholders’ equity of the company. The ratio shows the level of
profitability or the return generate y the company on the total
shareholders’ equity of the company. The ratio stands as one of the
most important financial performance assessor for identifying the
financial performance of the company. The return on equity for the
company was around 47.2% for the company.
b) Strategic Decisions
In order to stay profitable and have a sustainable profitability
condition it is necessary for the company to identify various factors that
contribute the overall profitability which affect the profitability of the
divisions. Both the bathroom accessories divisions and the pipes division
will be analysed based on the profitability and financial viability of the
divisions. The bathroom division of the company had a sound operating
profitability with around 7.14% to be the total profitability with a market
share of around 8% and a chance to improve the overall profitability by
bringing operational efficiency in the company. On the other hand, side
the pipe division of the company had almost the same revenue as the
bathroom accessories division but the reported profitability was poor
when compared to the other divisions. The reported profitability of the
division was around 1.67% and the same has been due to higher
operating costs associated with the divisions and a lower market share
(Wheelen et al. 2017).

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Both the division of the company is having a lower market share but
it is important to bring operational efficiency in the business by reducing
the operation cost and various expense related to the business. The
market share of both the divisions and the share of revenue of each of the
division needs to be improved for both the division. Capital expenditure on
the division would be significantly based on the capacity and the ability of
the divisions of the company. The Pipe Division needs to be significantly
improve the operations of the company as the profitability is poor and the
market share held by the division is low. The operations of the company is
significantly based on the increasing competition and higher operational
cost for the company, which makes difficult for the company to bring
operational efficiency in the form of higher return to the company (Bansal
and DesJardine 2014).
It is recommended that the company should sell the Pipe Division
due to the unconditional factors that are affecting the overall viability and
sustainability of the company. The Bathroom Accessories on the other
hand should be taken as Capital Expenditure Programme that would be
helping the division further in bring operational efficiency by increasing
the level of sales in the company and the amount of market share
captured by the divisions. Material cost was the main component of the
total expenses in the Bathroom accessories divisions, which can be well
settled off with the higher amount or growth of the business in the form of
rising revenue for the company. On the other hand side the Pipe division
had a higher wages cost and salaries cost, which constituted the majority
of the total expenses that was spend by the division in the overall
operations of the company. It is advisable for the company to spend
resources and efforts of the management in the development and
planning of the other key divisions of the company (Hagiu 2014). The
other divisions of the company are having a sound profitability and
sufficient market share in the industry that will be allowing the company
in reporting higher profitability and wealth creation of the shareholders of
the company (Enekwe, Agu and Eziedo 2014).

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c) Financial Gearing
The financial gearing of the company shows the level and exposure
of the level of debt in a company. The debt to equity ratio for the
company was calculated by taking the long-term debt of the company and
the total shareholder’s equity. For the potential investment into the new
project or development, it is necessary for the company to review the
financial performance of the company and the financial position of the
company (Amba 2014).
The gearing ratio for the company was around 34%, which is
considered as an optimal debt coverage ratio for the company, which is
considered as optimal for the company. The gearing ratio for the company
is optimal as the companies needs to consider the same by analysing the
various factors and conditions under which the operations of the company
is based. High level of debt in the company may increase the financial risk
associated with the company thus, it is necessary for the company to
have an optimal level of debt and equity in the company (O'Hare 2016).
The liquidity ratio for the company was calculated by taking the current
ratio of the company. The liquidity ratio for the company was calculated
by dividing the current assets divided by the current liabilities of the
company. The current ratio for the company was around 1.75 times which
is sound for the company implying the company is having an sufficient
amount of current assets for covering the current liabilities of the
company.
i) Payback period
The Payback Period is calculated as = Cost of project or investment /
Annual cash inflow
The factors that influence the payback period of the development
activities undertaken and the equipment replacement programs
undertaken by the company can be the initial cost of investment, the
timing of the cash inflows from the project. The payback period simply
calculates the average time taken by the investment project top return

10MANAGERIAL ACCOUNTING
back the initial invested amount by considering the annual cash inflows
from the company. Delay in cash inflows of the project and increase in the
initial invested amount are some of the crucial factors that can affect the
overall operations of the company and the payback period of the
company. Thus, it is important for the company to materialize various
factors and points that may significantly affect the operations and the
payback period of the company.
ii) Reducing Gearing
Reducing gearing ratio for the company implies the reducing
exposure of debt for the company. Gearing ratio for the company implies
the extent of debt. The company can reduce the gearing ratio in the
company in various ways. It is important to note that primarily there are
two keys risks that are associated with the company, which is the
business risk, and financial risk. Reducing gearing ratio for the company in
the form of repayment of borrowed funds, retaining the profits of the
company rather than distributing the same to the shareholders of the
company. Issuing more equity shares and converting the loans into equity
shares are some of the common forms of reducing the overall equity level
of the company.
The strategic aim for reducing the gearing ratio of the company is to
reduce the overall risk of the company in the form of financial risk that
would be associated in a company in the form of higher debt of the
company. The aim of the company to invest in the modernization program
is due to the operational efficiency and the expansion of the company that
would be seen by the company in the form of increasing business of the
company. Better and efficient technology and better utilization of the
asset through better and modern equipment’s of the company will be
helping the company in creating better returns for the company.
Delivering better return and creating wealth for the shareholders of the
company is the prime objective of the company that would be helping the
company in achieving the overall sustainability of the company. The
capital structure of the company thus should be optimal allowing the

11MANAGERIAL ACCOUNTING
company to take the advantage of both equity and debt in the books of
accounts of the company and create a better capital structure for the
company. Low cost financing and tax deductible interest expenses makes
debt financing easy and attractable for the company. On the other hand,
low risk associated with equity financing is the key reason for financing
equity as a reliable capital source for the company. Thus, it is important
for the company to have an optimal mix of both debt and equity and
create a well and sustainable capital structure for the company. The same
should be analyzed based on the various business factors and macro-
economic factors under which the operations of the company is based.
d) Decentralize Program
i) Ratio Analysis is an important quantitative assessment tool that is used
for identifying the financial performance of the company.
The return on equity for the company was calculated by taking the
net income divided by the total shareholders’ equity of the company. The
ratio shows the level of profitability or the return generate by the
company on the total shareholders’ equity of the company. The ratio
stands as one of the most important financial performance assessor for
identifying the financial performance of the company. The return on
equity for the company was around 47.2% for the company.
Return on total assets of the company could be further calculated
with the help of the net income and the total assets of the company. The
management of the company can further assess the efficiency of the
company with the help of this ratio signifying the utilization of the assets
of the company.
Decentralisation of the office staff in the company will help the
management of the company in better management of the various office
head staffs that would be helping the company in making better informed
(Edwards, Yilmaz and Boex 2015). The company would be also saving
costs related to the office staff after the decentralisation of the office
staffs. Better-informed and quick decisions would be the quick

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response and result of the decentralisation. Responding to various
changes in the management level and operations of the company will be
the key advantage of the company that will be helping them (Johnson et
al. 2014).
However, it is key to note that still there are various other
disadvantages that are related with the decentralisation programmes that
would be affecting the operations of the company. Lack of goal
congruence and costly duplication of the various activities of the company
will be the key disadvantages of decentralisation (Pilbeam 2018).
ii) Management Accounting Function
Various factors needs to be undertaken by the company for the
purpose of the analysis with the help of the various management
accounting functions. Planning, Organising, Controlling and making
various decisions related to the management of the company are some of
the key aspects that should be taken into analysis. The company should
require timely reporting system from the host country operations and
subsidiaries of the company. The company should have a well-established
corporate and ethical guideline, which would be guiding the operations of
the company on global basis operations (Faguet 2014).
The company also need to verify various operations and the
accounting system when the operations of the company will be spread on
a global basis thereby allowing the company to operate well. Policies and
Regulations of the companies should be such so that the same guides the
management in the various operations. While expanding the operations of
the company it is also important to consider various other factors such as
complying with global rules and regulations and various factors that the
company should account.
Conclusion
The financial analysis of the various divisions of Triton Corporation
was done based on the return generated by each of the divisions. The
analysis of the company for the various operational division was done by

13MANAGERIAL ACCOUNTING
taking the revenue generated and the profitability from each of the
division for assessing the financial viability of the divisions. The
importance and the relevance of the ratio analysis for evaluating the
financial performance of the company was taken into consideration for the
company. The financial viability of the various division was done with the
help of the overall profitability and cost associated with the divisions. High
level of debt increases the financial risk associated with the company and
it is optimal for the company to have an optimal level of debt in the
company. Business risk and financial risk are some of the key risk
associated with the company and the same has been taken into
consideration for the purpose of the analysis. The gearing ratio for the
company is optimal as the companies needs to consider the same by
analysing the various factors and conditions under which the operations of
the company is based. The advantages of decentralisation and expansion
of the global operations of the company was also taken into consideration
while analysing the operations of the company.

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Appendix
1) Ratio Analysis of Triton Corporation
Ratio Analysis of Triton
Corporation
Particulars
Amoun
t
Operating Profit 15.1
Net Sales 123.2
Operating Profit Margin 12.3%
Net Income 15.1
Total Assets 100
Return on Total Assets 15.1%
Net Income 15.1
Shareholder's Equity 32
Return on Equity 47.2%
Current Assets 35
Current Liabilities 20
Current Ratio 1.75
Total Liabilties 20
Shareholder's Equity 58
Debt to Equity Ratio 34%