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 rejoinder on Capital utilize (ROCE) we give nonice confab that the return is good (possibly a little low) besides does reform 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 come around steady at around 17 % end-to-end the distributor point (though at that place is a lithe improvement between 2002 and 2003. Distribution cost could be of about concern due to the label up(a) movement between the years, these be should be investigated to see if they argon justified or if on that point is some need for bud accomplishary control. Administration costs atomic number 18 favourable and good control is in place. Referring later to honest wage to employee it may be executable that the company has granted low pay-rises ove r 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 lessen 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 switch operations we know it has declined relative to the ill-judged term debts of 2002 and 2003. The liquidness problem may be a planned condensed term position and linked to the heavy purchases in vehicles and equipment in 2002 and 2003. The quick ratio being a little a good deal stringent when checking liquidity shows the value moving towards 1, if the ratio becomes less(prenominal) than 1 then liquid present-day(prenominal) assets will not compensate current liabilities, which would further illustrate the potential liquidity problems in... If you emergency to get a fu! ll essay, order it on our website: BestEssayCheap.com

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