Joshua and White Case Study

Topics: Financial ratios, Financial ratio, Generally Accepted Accounting Principles Pages: 13 (3249 words) Published: May 20, 2013



Domáce zadanie z predmetu
Finacial Analysis

Prednášajúci: Jaroslav Dado

Účastník modulu: Alica Abou El Kas

Dátum odovzdania práce: 26. 3. 2013

Domáce zadanie z predmetu Financial Analysis

Written report (40 points = 40%): Individually write a report no more than 10 sides of A4 conforming to the SMA presentation guidelines around the following scenario: You work as a financial manager. You have been asked to write a report, to be presented to the board of directors, analysing the financial statements to present to the Board. You should assess the organisation's financial viability, improve the quality of the financial statements by applying financial ratios, and recommendations on the strategic portfolio based on the financial information.

Tabuľka pre celkové vyhodnotenie resp. stanovenie počtu kreditov:



Vyhlasujem, že som domáce zadanie spracoval/a samostatne, na základe vlastných teoretických a praktických poznatkov. Použitá literatúra a externé zdroje sú správne označené v súlade s autorským zákonom, Zákon č. 618/2003, uverejnené v Zbierke zákonov č. 252/2003 strana 5954.

Bratislava, 26. 03. 2013


We have calculated the financial analysis of Joshua & White for the years 2009 and 2010 based on the prepared financial statement (as per appendix). The ratios are categorized into five different categories. These ratios are compared to industry average to analyze the company’s performance. The analysis of these ratio’s will give an indicator for the board of director’s to make adjustments in their planning as well as for the investors in making decision. The analysis of the performance is as follows:

Liquidity Ratios:

It shows the firm’s ability to “meet their short term financial obligations that is whether the company has the resources to pay its creditors when they are due. Generally, the higher the value of the ratio, the larger the margin of safety that the company possesses to cover short-term debts”[1] Current ratio and quick ratio are classified under this category.

The Current Ratio has declined by 3.2% being more significantly below the industry average than the previous year. This shows a declining pattern for this ratio.

|Liquidity Ratios |2010 |2009 |Industry Avg. |Variance |change | | Current Ratio |2.44 |2.52 |2.58 |-0.08 |3.2% | | Inventory Turnover |5.00 |7.14 |7.69 |-2.14 |30.0% | | Days Sales Outstanding |45.63 |43.80 |47.45 |1.83 |4.0% | | Fixed Assets Turnover |1.92 |2.00 |2.04 |-0.08 |4.2% | | Total Assets Turnover |1.11 |1.22 |1.23 |-0.11 |9.0% |

“The Inventory Turnover measures the firm's management of its Inventory. In general, a higher Inventory Turnover Ratio is indicative of better performance since this indicates that the firm's inventories are being sold more quickly.”[3] The ratio here shows 30% decline when comparing 2009 and 2010 and also a decline in comparison with the industry average. In 2009 this ratio was just below the industry average, which in following year worsened significantly. This indicates that the company is building up its inventory and is taking longer time before it sells.

Days Sales Outstanding ratio measures the average number of days that a company takes to collect revenue after a sale has been made. In...
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