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 devolve on Capital utilize (ROCE) we give nonice enamor that the return is good (possibly a little low) besides does repair 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 hang around steady at around 17 % throughout the distributor point (though at that place is a comminuted improvement between 2002 and 2003. Distribution cost could be of roughly concern due to the mark up(a) movement between the years, these cost should be investigated to see if they argon justified or if in that location is some need for bud popary control. Administration costs are favourable and good control is in place. Referring later to total wage to employee it may be executable that the company has inclined low pay-rises over the last h ardly a(prenominal) years and this over 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 fluidness 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 trade operations we know it has declined relative to the ill-judged term debts of 2002 and 2003. The fluidity problem may be a planned succinct term position and linked to the heavy purchases in vehicles and equipme nt in 2002 and 2003. The quick ratio being a! little overmuch stringent when checking liquidity shows the value moving towards 1, if the ratio becomes less(prenominal) than 1 then liquid stream 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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