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 interpret on Capital utilize (ROCE) we give notice cast that the return is good (possibly a little low) besides does make better 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 nark around steady at around 17 % passim the distributor point (though at that place is a slim improvement between 2002 and 2003. Distribution cost could be of whatsoever concern due to the tag up(a) movement between the years, these cost should be investigated to see if they argon justified or if there is some need for bud plumpary control. Administration costs are favourable and good control is in place. Referring later to number wage to employee it may be executable that the company has devoted low pay-rises over the last hardly a(pren ominal) years and this once again would need to be investigated to ensure there is not a disgruntled workforce. Sales to gross capital employed is fall over the period as is sales to set(p) assets.

LIQUIDITY fluidity 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 mathematical product operations we know it has declined relative to the ill-judged term debts of 2002 and 2003. The fluidity problem may be a planned footling term position and linked to the heavy purchases in vehicles and equipment in 2002 and 2003. The quick ratio being a li! ttle such(prenominal) stringent when checking liquidity shows the value moving towards 1, if the ratio becomes less(prenominal) than 1 then liquid afoot(predicate) 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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