Ok Grocer Case Analysis
Four key ratios you applied ad to identify and mitigate potential risk for this customer
Gross profit margins. Margins are fixed. Operating expenses/turnover deteriorating yearly due to the ever increasing costs.
Increase sales volumes- how they can achieve that firstly attract more feet/ client.
The revamp of converting a quick shop into OK Grocer will assist in attracting new clients. The garage does not have ATM’s on site, they need to apply for the installing of the ATM’s at all different banks. Supply all pumps with an air gauge. Improve on service delivery. Identify and canvass businesses in the area that are major users of petrol and diesel. Unfortunately the filling station does not have sufficient space for car wash however the …show more content…
Business is highly leveraged and equity in the business insufficient to absorb debts should the worst happen. The business does not have own funds invested in the business and equity is comprised of retained profits of R813K. Bank cannot put reliance on the equity at hand. Members need to invest funds into the business, reduce debt level or apply for restricting of facilities.
Liquidity in the business is a huge concern. Working capital declined from negative R3,875K to negative R5,991K. Current ratio low @ 0.50% previously was 0.58%. Stock is moving however debtors are increasing, increased from R3,902 to R4,425K, funds get locked up in the debtors not paying on time. Creditors rand value also increased from R7,124K to R8,776K. Client should focus on collection of debtors as their debtor’s book small. To improve debt collection give discounts on encourage early payments. With regards to creditors client can negotiate with his creditors to extend their payment …show more content…
Assuming that the business will not cease to exist, will continue to operate and carry out its objectives and commitment and will not be liquidated in the foreseeable future. They are been prepared in accordance with the International Financial Reporting Standard for Small and Medium-sized Entities. The information provided proper accounting policies were applied and can be supported and reasonable and prudent judgements and estimates. Financials prepared according to the accounting principles as a credit analyst you able to trust the information is correct and one can put reliance on the assumptions and judgements. You can assume based on the historical financials that there is consistency from year to year in methods used to prepare the financial statements. Accounting principles provide a breakdown of different components of the financial statements such as the following;
• Auditors report- auditors share their evaluations and opinions in terms of the validity and reliability of the financial statements And whether they are qualified or
Gross profit margins. Margins are fixed. Operating expenses/turnover deteriorating yearly due to the ever increasing costs.
Increase sales volumes- how they can achieve that firstly attract more feet/ client.
The revamp of converting a quick shop into OK Grocer will assist in attracting new clients. The garage does not have ATM’s on site, they need to apply for the installing of the ATM’s at all different banks. Supply all pumps with an air gauge. Improve on service delivery. Identify and canvass businesses in the area that are major users of petrol and diesel. Unfortunately the filling station does not have sufficient space for car wash however the …show more content…
Business is highly leveraged and equity in the business insufficient to absorb debts should the worst happen. The business does not have own funds invested in the business and equity is comprised of retained profits of R813K. Bank cannot put reliance on the equity at hand. Members need to invest funds into the business, reduce debt level or apply for restricting of facilities.
Liquidity in the business is a huge concern. Working capital declined from negative R3,875K to negative R5,991K. Current ratio low @ 0.50% previously was 0.58%. Stock is moving however debtors are increasing, increased from R3,902 to R4,425K, funds get locked up in the debtors not paying on time. Creditors rand value also increased from R7,124K to R8,776K. Client should focus on collection of debtors as their debtor’s book small. To improve debt collection give discounts on encourage early payments. With regards to creditors client can negotiate with his creditors to extend their payment …show more content…
Assuming that the business will not cease to exist, will continue to operate and carry out its objectives and commitment and will not be liquidated in the foreseeable future. They are been prepared in accordance with the International Financial Reporting Standard for Small and Medium-sized Entities. The information provided proper accounting policies were applied and can be supported and reasonable and prudent judgements and estimates. Financials prepared according to the accounting principles as a credit analyst you able to trust the information is correct and one can put reliance on the assumptions and judgements. You can assume based on the historical financials that there is consistency from year to year in methods used to prepare the financial statements. Accounting principles provide a breakdown of different components of the financial statements such as the following;
• Auditors report- auditors share their evaluations and opinions in terms of the validity and reliability of the financial statements And whether they are qualified or