Andrews

Question no income ment Andrews For the period of 2007 particulars amount particulars amount opening stock 63000 sales 609000 purchases465000
closing stock
88000
gross profit
169000
697000
697000
repair to building
1980
gross profit
169000
car expenses
2120
salaries
89240
discount received
8140
discount allowed
10610
rate and insurance
2030
bad debts
3190
general expense
15860
depreciation
2420
127450
net profit
49690
177140
177140
balance sheet
Andrews
As at march 2007
particulars
amount ()
particulars
amount ()
capital
205000
fixed assets
drawings
-25060
motor car
8640
retained earning
49690
free hold land and building
106500
creditors
40350
fixtures and fitting
13140
accrued salaries
3180
inventory
88000
debtors net
51130
prepaid insurance
450
bank
5300
273160
273160
Question no 2"
Liquidity of the Company
We have analyzed two important liquidity ratios: Current Ration, and Working Capital. A current ratio of 2 is considered "adequate liquidity". The company has Current Ratio numbers for 2006 and 2005 1.2 and 1.1 which shows that the company has at least good funds to discharge the short term obligations and also there is an increase in the ratio which is also good in the future.
Interest coverage ratios shows that how much times the profit covers the interest which is a financial liability .the company’s interest ratio is 20 for 2006 and 12 for 2005 which shows that the company is financially stable.
Profitability ratio
ROE is viewed as one of the most important financial ratios. It measures a firm’s efficiency at generating profits from every dollar of net assets. The RoE of the company is 0.8 and 0.6 for 2006 and 2005 respectively. The numbers shows that the company is not so much good in generation revenues and is not increasing the share holders wealth. High ROE yields no immediate benefit. Since stock prices are most strongly determined by earnings per share (EPS). The benefit comes from the earnings reinvested in the company at a high ROE rate, which in turn gives the company a high growth rate.
Efficiency ratios:
Inventory turnover ratio shows that how the company is managing its stock the numbers for the company is 31 nad 19 for 2006 and 2005 respectively. By analyzing the company’s inv. Turnover ratio we have analyzed that the company is not managing its inventory in 2006 that of 2005.
Debtors turnover ratio tell about the company’s management that how the receivables are collected and the company has good debtors ratio which is a proof of the managements efficiency.
The asset turn over ratio gives an idea about how well the company is using its assets in generating revenues. The numbers for the company are 1.6 and 1.1 for the year 2006 and 2005 respectively, which shows that the company is well doing in using its assets and also there is an increase in the ratio which tells about the growth of the company.
Earning per share:
Earning per share is the share holder specific ratio which tells that how much the company is creating wealth for its share holders the company’s EPS is 12.8p and 9.3p for the year 2006 and 2005 which shows that the company is adding wealth to its share holders and is growing year to year.
Appendix:
efficiency ratios
2006
2005
2006
2005
inventory turnover
cogs
2402609
1441950
31.82854
19.10222
ave inv.
75486
75486
receivable turnover
sales
3095576
1909051
3.335495
2.05701
av. Rec.
928071
928071
fixed asset turn over
sales
3095576
1909051
3.858954
2.909824
fixed assets
802180
656071
total asset turnover
sales
3095576
1909051
1.654831
1.146973
total assets
1870630
1664425
solvency and liquidity ratios
interest coverage
EBIT
359501
244229
20.69547
12.76881
interest payment
17371
19127
current ratio
current assets
1068450
1008354
1.211764
1.105099
Current liab.
881731
912456
profitability /investment ratio
GP margin
GP
692967
467101
22.38572
24.46771
sales
3095576
1909051
NP margin
NP
226930
177030
7.330784
9.273194
sales
3095576
1909051
ROE
NP
226930
177030
0.878984
0.685703
Total equity
258173
258173
RoC
EBIT
359501
244229
1.392481
0.94599
Total equity
258173
258173