Analysis of Working Capital for Financial Reporting

This report provides an analysis of working capital, including a breakdown of current assets, current liabilities, and the calculation of the working capital turnover ratio. The report also includes tables detailing the composition of current assets and liabilities, and provides insights on financial performance based on the provided data. The analysis covers the period from 2007 to 2008, and includes financial ratios and their interpretation. The report also includes references to relevant sources to support the analysis.

WORKING CAPITAL

TABLE OF CONTENTS
Calculation of working capital.........................................................................................................1
Working capital turnover ratio.........................................................................................................1
REFERENCES................................................................................................................................2

Calculation of working capital
Table 1Computation of working capital
2008 2007
Current assets 102139 125331
Current liability 49846 52013
Working capital 52293 73318
Interpretation
Working capital refers to the amount of fund that is available to the business firm for
meeting its day to day expenses (Working capital turnover, 2013). It can be observed that in case
of the FY2008 working capital was 52293 and same in case of FY2007 was 73318. It can be said
that working capital reduced for the business firms.
Working capital turnover ratio
Table 2Working capital turnover ratio
Revenue 29394
Average working capital 62805.5
Working capital turnover 0.468016
Interpretation
Working capital turnover ratio reflects the amount earned on each unit of working capital
invested in the business (Net working capital turnover, 2017). It can be said that for making
investment of each unit $0.46 is earned. It can be said that very low amount of return is earned
on the amount of investment made in the business.
Table 3Average working capital
Opening working capital 73308
Closing working capital 52293
Average WC 62805.5
Interpretation
Average working capital is £62800 which means that on average basis working capital of
$62800 is observed in the business.
Working notes on segragation
Table 4Components of current assets
Current assets
Items 2008 2007
Total investments 95998 118980
Cash 415 422
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Premium installment receivables 4842 4879
Accrued investment income 884 1050
102139 125331
Table 5Components of current liability
Current liability
Items 2008 2007
Reserve for property liability 19456
1886
5
Unearned premium 10024
1040
9
Claim payments outstanding 790 748
Other liabilities and accrued expenses 6695 8779
Reserve for life contingent contract
benefits 12881
1321
2
49846
5201
3
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REFERENCES
Books and journals
Working capital turnover, 2013. [Online]. Available through:<
http://accountingexplained.com/financial/ratios/working-capital-turnover>. [Accessed on
1st July 2017].
Net working capital turnover, 2017. [Online]. Available through:<
https://www.advfn.com/Help/net-working-capital-turnover-301.html>. [Accessed on 1st
July 2017].
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