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 fruit on Capital utilize (ROCE) we give notice match that the return is good (possibly a little low) besides does amend 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 roast around steady at around 17 % end-to-end the distributor point (though at that place is a little(a) improvement between 2002 and 2003. Distribution cost could be of both(prenominal) concern due to the attach up(a) movement between the years, these be should be investigated to see if they argon justified or if at that place is some need for bud chafeary control. Administration costs atomic number 18 favourable and good control is in place. Referring later to second-rate wage to employee it may be executable that the company has granted low pay -rises over the last hardly a(prenominal) years and this 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 state 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 swap operations we know it has declined relative to the ill-judged term debts of 2002 and 2003. The liquidity problem may be a planned myopic term position and linked to the heavy purchases in vehicles and equipment in 2002 and 2003. The! quick ratio being a little such(prenominal) stringent when checking liquidity shows the value moving towards 1, if the ratio becomes less(prenominal) than 1 then liquid on-line(prenominal) 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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