Financial Accounting Case Study

Analysis and Comment on Highlow Engineering Profitability Commenting on Highlow Engineerings profitability and referring initially to the primary coil measure of bring back on Capital utilize (ROCE) we give nonice take to that the return is good (possibly a little low) besides does ameliorate from 2002 to 2003. Gross profit at 33.0 % in 2003 is excellent and shows a healthy year on year increase from 2001 onwards. Overheads experience around steady at around 17 % throughout the distributor point (though at that place is a dismiss improvement between 2002 and 2003. Distribution cost could be of or so concern due to the marked up(a) movement between the years, these cost should be investigated to see if they argon justified or if thither is some need for bud pass waterary control. Administration costs argon favourable and good control is in place. Referring later to average out wage to employee it may be executable that the company has given low pay-rises over the last hardly a(prenominal) years and this once again would need to be investigated to ensure there is not a disgruntled workforce. Sales to gross capital employed is diminish over the period as is sales to set(p) assets.

LIQUIDITY liquid is an issue as there has been a steady (not sharp) marked decline in runniness and though we have not calculated the ability of the business to generate cash from deal operations we know it has declined relative to the ill-judged term debts of 2002 and 2003. The fluidness problem may be a planned piddling term position and linked to the heavy purchases in vehicles a nd equipment in 2002 and 2003. The quick rat! io being a little much stringent when checking liquidity shows the value moving towards 1, if the ratio becomes less(prenominal) than 1 then liquid authentic assets will not compensate current liabilities, which would further illustrate the potential liquidity problems in... If you emergency to get a full essay, order it on our website: BestEssayCheap.com

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