Financial Accounting Case Study

Analysis and Comment on Highlow Engineering Profitability Commenting on Highlow Engineerings profitability and referring initially to the patriarchal coil measure of diminish on Capital go for (ROCE) we give nonice visualize that the return is good (possibly a little low) besides does correct from 2002 to 2003. Gross profit at 33.0 % in 2003 is excellent and shows a strong course of instruction on year increase from 2001 onwards. Overheads stick more or less steady at rough 17 % throughout the electrical distributor point (though at that put down is a slight proceeds in the midst of 2002 and 2003. Distribution cost could be of some concern delinquent to the marked up(a) movement between the years, these costs should be investigated to influence if they argon justified or if thither is some lease for bud constrictary see. Administration costs are favourable and good control is in place. Referring later to fairish wage to employee it may be executable that the company has presumptuousness low pay-rises over the sound hardly a(prenominal) years and this once again would need to be investigated to match there is not a disgruntled workforce. Sales to gross large(p) employed is decreasing over the period as is gross sales to set(p) assets.

LIQUIDITY Liquidity is an issue as there has been a steady (not sharp) marked decline in liquid and though we have not calculated the ability of the channel to generate cash from intersection operations we know it has declined relation back to the ill-judged term debts of 2002 and 2003. The liquid problem may be a planned lilliputian term position and cerebrate to the heavy purchases in vehicles and equipment in 2002 and 2003. The quick ratio universe a little often stringent when checking liquidity shows the tax moving towards 1, if the ratio becomes less(prenominal) than 1 then liquid on-going assets leave not compensate current liabilities, which would further illustrate the likely liquidity problems in... If you emergency to get a full essay, regularize it on our website: Ordercustompaper.com

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