Daisy Limited Case Study
Current Ratio shows the liquidity of a business.
Current Ratio = Current Assets/ Current Liabilities
If the current ration is too low,the business may have difficulty in meeting its short-term obligations. However, the ratio should not be too high, there may be too many current assets lying idle. This means that these current assets are not efficiently used to generate revenues and profits for the business. Therefore, Daisy Limited should have funding. The followings is the sources of funding.
Task 1 (a) Review sources of funding available to business industries.
Sources can be divide as short-term and long-term funding.
Short-term Funding
Short-term loan provide an …show more content…
It is to give an indication of the success or otherwise of management policies to generate profit.. it can see where profits are before interest and tax have been allocated and to indicate the profit philosophy of the company.
Fig 3.3
Adjustment
The trial balance lists the balances on the ledger accounts at the period end date. It doesn 't take into account various items which can only be calculated right at the period once the final position is known. These adjustment include the cost of good sold, accrual and prepayment , bad debt.
Accrual and prepayment are expenses have been incurred but have not yet been paid, and some that have been made in advance. A bad debt is the business find it impossible to collect from the customer.
Importance of adjustment is to helps department heads create meaningful operating dynamics between top leadership and the record keeping team, paving the way for sound and complete financial statement preparation down the road. For example, senior personnel may review internal accounting policies to figure out how bookkeepers record transactions, make periodic adjustments, follow regulatory guidelines and periodically attend training sessions to expand or jump-start their accounting …show more content…
That is, the profit to the company after all material and labor production costs.
Gross profit margins vary significantly by industry and type of business. Gross profits margins in the pharmaceutical industry typically range from 50 to 100 percent, and in the textile manufacturing industry margins average around 40 to 45 percent. 54.8% is a high value. It means the cost put product production is fewer than others.
Liquidity
Current ratios: The current ratio measures the business whether has enough resources to pay its bills over the next 12 months. A current ratio of over 1 is good news. Daisy (1.07) is in the range. If the ratios is high, there may be problems with collecting account receivable or be carrying too much inventory.
Efficiency
Stock Turnover: it known as The Inventory turnover. It is a measure of the number of times inventory is sold or used in a time period such as a year. The equation for inventory turnover equals the cost of good sold divided by the average
Current Ratio = Current Assets/ Current Liabilities
If the current ration is too low,the business may have difficulty in meeting its short-term obligations. However, the ratio should not be too high, there may be too many current assets lying idle. This means that these current assets are not efficiently used to generate revenues and profits for the business. Therefore, Daisy Limited should have funding. The followings is the sources of funding.
Task 1 (a) Review sources of funding available to business industries.
Sources can be divide as short-term and long-term funding.
Short-term Funding
Short-term loan provide an …show more content…
It is to give an indication of the success or otherwise of management policies to generate profit.. it can see where profits are before interest and tax have been allocated and to indicate the profit philosophy of the company.
Fig 3.3
Adjustment
The trial balance lists the balances on the ledger accounts at the period end date. It doesn 't take into account various items which can only be calculated right at the period once the final position is known. These adjustment include the cost of good sold, accrual and prepayment , bad debt.
Accrual and prepayment are expenses have been incurred but have not yet been paid, and some that have been made in advance. A bad debt is the business find it impossible to collect from the customer.
Importance of adjustment is to helps department heads create meaningful operating dynamics between top leadership and the record keeping team, paving the way for sound and complete financial statement preparation down the road. For example, senior personnel may review internal accounting policies to figure out how bookkeepers record transactions, make periodic adjustments, follow regulatory guidelines and periodically attend training sessions to expand or jump-start their accounting …show more content…
That is, the profit to the company after all material and labor production costs.
Gross profit margins vary significantly by industry and type of business. Gross profits margins in the pharmaceutical industry typically range from 50 to 100 percent, and in the textile manufacturing industry margins average around 40 to 45 percent. 54.8% is a high value. It means the cost put product production is fewer than others.
Liquidity
Current ratios: The current ratio measures the business whether has enough resources to pay its bills over the next 12 months. A current ratio of over 1 is good news. Daisy (1.07) is in the range. If the ratios is high, there may be problems with collecting account receivable or be carrying too much inventory.
Efficiency
Stock Turnover: it known as The Inventory turnover. It is a measure of the number of times inventory is sold or used in a time period such as a year. The equation for inventory turnover equals the cost of good sold divided by the average