Accounting A User Perspective Paper
Accounting: A User Perspective
Assignment 2
April 2014
Prepared by Marcelo De la cruz Plejo
Student ID, z3479895
Master of Business and Technology
GBAT9120 Accounting: A User Perspective – Semester 1 - 2014
Facilitator, Ken Trottman
1. Question 1 [14 marks]
Ratio
2014 Calculations
Results
2013 Calculations
Results
1. Return on Equity
(2425 / 78018)x100
3.10%
3752/50319
7.46%
2. Alternative Return on Assets
(6985 / 216899)x100
3.22%
(9150 / 198522)x100
4.61%
3. Alternative Profit Margin
(6985 / 43014)x100
16.24%
(9150 / 59860)x100
15.28%
4. Gross Margin
(43014 – 24656) / 43014
42.68%
(59860 – 38577) / 59860
35.55
5. Price-Earnings Ratio
$0.95 / $0.084
11.31 times
$0.98 / $0.068 …show more content…
Therefore is important to analyse “days in debtor” indicator, which indicate how long it takes for Nocarb’s customers to pay their debts. We can see that it is taking longer for customers to pay their bills from 285 days in 2013 to 760 days this year. If this becomes a tendency Nocarb can be in risk of running out of cash, necessary for daily operations. This also indicate that Nocarb it is over financing its customers
Financial structure ratio
After analysing Nocarb’s liquidity and activity ratios, which indicates a poor performance, we need to measure the borrowing level of Nocarb. “Debt to Equity” will help us to see how risky this company is. Debt to Equity ratio has significantly decreased from 294.53% in 2013 to 178% this year but it is still a high level. A ratio of 178% indicates that Nocarb assets are financed mostly with debt, making Nocarb more vulnerable to any fluctuation of interest rates.
Conclusion
Soft drink industry is a mass production industry. We assumed Nocarb does not have a unique product as most of its counterparts. This industry relays in high levels of sales, maximum inventory turnover and minimal levels of inventory to reduce
Assignment 2
April 2014
Prepared by Marcelo De la cruz Plejo
Student ID, z3479895
Master of Business and Technology
GBAT9120 Accounting: A User Perspective – Semester 1 - 2014
Facilitator, Ken Trottman
1. Question 1 [14 marks]
Ratio
2014 Calculations
Results
2013 Calculations
Results
1. Return on Equity
(2425 / 78018)x100
3.10%
3752/50319
7.46%
2. Alternative Return on Assets
(6985 / 216899)x100
3.22%
(9150 / 198522)x100
4.61%
3. Alternative Profit Margin
(6985 / 43014)x100
16.24%
(9150 / 59860)x100
15.28%
4. Gross Margin
(43014 – 24656) / 43014
42.68%
(59860 – 38577) / 59860
35.55
5. Price-Earnings Ratio
$0.95 / $0.084
11.31 times
$0.98 / $0.068 …show more content…
Therefore is important to analyse “days in debtor” indicator, which indicate how long it takes for Nocarb’s customers to pay their debts. We can see that it is taking longer for customers to pay their bills from 285 days in 2013 to 760 days this year. If this becomes a tendency Nocarb can be in risk of running out of cash, necessary for daily operations. This also indicate that Nocarb it is over financing its customers
Financial structure ratio
After analysing Nocarb’s liquidity and activity ratios, which indicates a poor performance, we need to measure the borrowing level of Nocarb. “Debt to Equity” will help us to see how risky this company is. Debt to Equity ratio has significantly decreased from 294.53% in 2013 to 178% this year but it is still a high level. A ratio of 178% indicates that Nocarb assets are financed mostly with debt, making Nocarb more vulnerable to any fluctuation of interest rates.
Conclusion
Soft drink industry is a mass production industry. We assumed Nocarb does not have a unique product as most of its counterparts. This industry relays in high levels of sales, maximum inventory turnover and minimal levels of inventory to reduce