Credit Management

Topics: Debt, Economics, Generally Accepted Accounting Principles Pages: 2 (776 words) Published: May 21, 2013
gementQuestion 5
1. What is the expected trend for the company in the future based on the financial statement? The trend would be increase, decrease or remain constant for a certain period. If the business was run profitably for some years, then it may not be unreasonable to assume the trend will continue. In the financial statement, it clearly state that the gross profit from trading show an increase from $161314 from the past year to $287239 for the current year. This shows the current increase in the gross profit reflect the company achievement in producing high quality of product and service. Therefore, here I suggest that the boat builder company should purchase new technology to do work so that they can reduce the number of subcontractors. New technology can reduce time consuming and produce better quality. Indeed, they can increase more on their total cost of sales. 2. How about the amount of actual sales and break-even sales of the company or we called margin of safety? If the business has a large margin of safety that is between actual sales and break-even sales, then some fluctuations in business conditions in the future may not be a cause for worry. This statement can be explained by looking at the company financial statement in term of the profit from the trading and the total sales of their product and service. The company should increase their total sale in order to increase the gross profit. For instance, they must think of creating new idea of product development and do some innovation. Then, this will help them to increase their margin of safety. For example, the company can build a very elegant boat especially for travelling or vacation purpose and sell it with higher price. 3. How the company can reduce expenses without compromising the quality of services? Controlling the amount of expenditure is an important element in order to maintain our asset. Indeed, majority company in the world need to spend some money in order to increase...
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