The analytic method exercised is designed to ascertain the development, prompt evaluation of the organization progress, profit and possible areas of development all aimed at ensuring business sustainability, market suitability, and profitability. However, in a bid to ensure effective and up-to-date evaluation of the companies performance, stability, liquidity solvency, profitability and also to paint a picture to aid better understanding of the companies financial concepts, position and performance, financial statistics and data were collected from the companies published reports, financial statements, credit and investment advisory services. Also, a comprehensive analysis of the organization's overall performance was identified using a combination of profitability ratio, liquidity ratio, performance efficiency ratio, Debt and debt leverage ratio and service
The concept of cash cycle is also important for better understanding of liquidity ratios. The cash continuously cycles through the operations of a company. A company 's cash is usually tied up in the finished goods, the raw materials, and trade debtors. It is not until the inventory is sold, sales invoices raised, and the debtors, make payments that the company receives cash. The cash tied up in the cash cycle is known as working capital, and liquidity ratios try to measure the balance between current assets and current
Accrual accounting and Cash flow accounting are critical factors which contribute to judgments and decision-makings that lead to a successful business. It is debatable whether accrual accounting is preferred to cash flow accounting, while there are some financial economists are in favor of using cash flow basic to report. This chapter will first give a foundation of accrual and cash flow accounting, then discuss the advantages as well as drawbacks of both methods and give the conclusion which type of accounting is suitable to record. Accrual accounting is an accounting that revenues are recognized when sales have been made and expenses are recorded when they are incurred, even the cash receipt from the revenue or the cash payment related to
Financial ratio analysis helps management (1) maintain sufficient working capital to support operations; (2) project how changes in sales, costs, prices and so on will affect capital needs and profits; (3) analyze management performance; and (4) measure the profitability of company units, products and departments. From a management perspective, the rationale for use of financial ratio analysis is that by expressing several figures from financial statements as ratios, information will be revealed that is missed when the individual numbers are observed. The theory is that managers can then use this information to improve the efficiency and profitability of their operation. Associated with this theory is the implicit assumption that information from ratio analysis, especially trend analysis, enables management to foresee and possibly avoid business failure (Thomas III and Evanson, 2006). Several practitioner-oriented publications suggest that financial ratios do not vary with firm size within an industry (Westwick 1987 and Centre for Interfirm Comparison 1977).
Money measurement concept: This implies that any transaction we do should have measurable value if we want to account it. The advantage of expressing business transactions in terms of money is that money serves a common denominator by means of which diverse facts about a business can be expressed in terms of numbers i.e. money. 3. Going concern concept: It is assumed that a business unit has a practical belief of continuing business at a profit for an indefinite period of time.
It deals with handling current assets and current liabilities that affect the liquidity and profitability of the firm. (Deloof, 2003) (Eljelli, 2004) To reach at the optimal level of WCM, firm should control the tradeoff between both profitability and liquidity. An optimal level of WCM enhances the firm’s value (Deloof, 2003).WCM is very complex area in the field of financial management. The ultimate objective of the firm is to maximize the value of a firm. At the same time, conserving liquidness is another objective too.
CHAPTER I ABOUT THE STUDY INTRODUCTION Effective inventory management is all about knowing what is on hand, where it is in use, and how much finished product results. Stock administration is the procedure of productively taking care of the consistent stream of units into and out of a current store. This procedure as a rule includes controlling the move in of units, keeping in mind the end goal to keep the stock from turning out to be too high, or diminishing to levels that could put the intellectual procedure of the organization into peril. Equipped stock administration likewise looks to control the money related qualities connected with the stock, both from the complete's perspective estimation of the products included and the taxation rate
These assistance to ensure the clients, by determining that items meet certain necessities and have suitable levels of wellbeing. The Laws likewise permit customers to recover their cash if products are discovered to be flawed or if items don't perform in the route guaranteed by the maker such as; Right to equality in the consumer market and protection against discriminatory marketing practices, additionally right to privacy, and right to fair and responsible marketing. Figuring out how to perceive moral issues is the most essential venture in comprehension business Ethics. An moral issue is an identifiable issue, circumstance, or opportunity that obliges an individual to look over among a few activities that may be assessed as right on the other hand wrong, moral or untrustworthy. In business, such a decision frequently includes weighing fiscal benefit against what an individual considers suitable behavior.
Agency theory provided a necessary explanation of why the selection of particular accounting methods might matter, and focused on the relationships between principals and agents, a relationship which, due to various information asymmetries, created much uncertainty. Agency theory accepted that transaction costs and information costs exist. Relying upon traditional economic literature (i.e. maximize own wealth), Jensen and Meckling considered the “relationship” and “conflicts” between agents and principals and how efficient markets and various contractual mechanisms can assist in minimizing the cost to the firm of these potential conflicts. It is assumed within Agency Theory that principles will assume that the agent will be driven by self-interest, and therefore the principle will anticipate that the manager, unless restricted from doing otherwise, will undertake self-serving activities that could be detrimental to the economic welfare of the
(Anon, 2009) To better comprehend the exercises through which a firm forms competitive advantage and makes shareholder value, it is convenient to disparate the business framework into an arrangement of value generating activities alluded to as the value chain. The value chain model is a valuable investigation instrument for characterizing an association's core competencies and the exercises in which it can peruse leverage by understanding expenses in a better way and crushing them out of the value adding activities. Also, through differentiation by concentrating on those activities connected with core competencies and capabilities so as to perform them better than contenders do. (Netmba.com,