You need to make judgement on each ratio- does it show the business is doing well? Explain why.
M2: You need to make judgement on each ratio- does it show the business is doing well. Explain why? Profitability: Profitability is a measure of the profit of a firm in relation to another. It allows for a more comprehensive assessment of the performance of a firm by comparing one figure to another. There are three profitability ratios: * Gross profit percentage of sales: This is calculated using the following formula: Gross profit * 100 = 76692.21 *100 = 53.90261 Sales turnover 142279.22 This ratio looks at gross profit as a percentage of sales turnover, this ratio is often referred to as the gross profit margin. If gross profit margin falls from one year to the next or is thought to be too low, a firm may try to reduce the cost of its purchases. This may involve looking for a cheaper supplier, but the firm must try to ensure that this does not affect the quality the product. Alternatively, it may try to increase sales without increasing the cost of goods sold. The gross profit made at every £1 made is 53p. It is okay, it is not that bad but the business could do better. It could be made better by looking for cheaper supplier but the quality of the product should be affected. * Net profit percentage of sales: This is calculated by using the formula: Net profit *100= 8978.64 *100 = 6.310577 Sales turnover
Evaluate the problems you have identified from unmonitored costs and budgets.
D3: Evaluate the problems you have identified from unmonitored costs and budgets. In this work assignment I have been told to evaluate the problems that occur if the costs and budgets are unmonitored. A simple problem that occurs if we are not monitoring the budget and costs then we will not know how the company is performing. A budget is a set goal and it is something to follow for the company. It is like we plan our day, sometimes we have to make adjustments but overall we have a plan on what we want to accomplish and if we don’t keep up or pay attention on what we are doing its more than likely we will not complete all of our tasks for the day. It is also to make sure that we aren’t going overboard on the costs, if we set percentages and if we are going way over or way under the percents then we predicted then we are going to have to find out what is causing it to be so extreme. Another problem can be if we leave our budgets unmonitored, they can go completely out of control. We can overspend, and we could over withdraw from it. We could lose money, and go into debt because we didn't monitor our spending. Also, our budgets could change because of changes in our environment, such as a new child in the house or somebody losing a job. The profit in a business is equal to profit= revenue – costs. In this case if the costs increase over the revenue than the
Describe the purpose of accounting for an organisation.
Unit 5 – P1 Purpose of accountancy Accountancy involves the recording of financial transactions that take place in a business, planned or actual, and the use of these figures to produce financial information. The business I am going to write about is FF I will talk about the accountancy in FF. Record Transaction: It is important that businesses keep their records accurate and up to date for them to run smoothly. The business owner must record all the money coming into the business from sales and all of the forgetting to pay bills. They may even get into seriouse trouble with HM Revenue and customs whichisa British government department for the collection of all of all typesof taxes. If a business doesnot record its transactions correctly it cannot report it finacial performance accurately and thereforetaxpayment maybe wrong. Monitor Activity: FF’s records must be updated on a regular basis so they have a good indication of how the business is doing in terms of sales, receiving payments, paying expenses and so on. This is useful for FF because they would realise if money going out seemed be on the increase while sales were dropping off, so they could make a change. Monitoring activity should also involve keeping an eye on the bank balance to ensure there are sufficient funds to meet day to day expenses. Overall it is important for FF to update their activity regularly
management accounting
Product Costing at Bremanama Company Mariyam Nazaha and Mizna Adam CONTENTS Introduction 3 Current Situation 3 Activity Based Costing 5 Product Costs under ABC 6 Adopting ABC Costing at Bremanama 8 Recommendations 8 Appendix 1 10 Appendix 2 11 Product Costing at Bremanama Company Introduction This study analyses the reasons for the declining profits of Bremanama following the introduction of the Large Model of their product. The report highlights the shortcomings of the current costing method in product pricing and looks at the more modern Activity Based Costing (ABC) as a possible way to better understand the unit costs which would in turn enable Management to better price the different products appropriately in order to maximise the revenues and profits of the company. This report will also address the limitations of ABC and the issues that need to be considered in moving to ABC. Current Situation Bremanama currently uses the traditional costing method for external reporting as well as internal decision making purposes. In traditional costing, costs are separated into three fundamental categories; direct materials, direct labour and overhead, containing all other costs. Within overhead maintenance, utilities, supervision, equipment costs, supplies and floor space costs such as building depreciation and rent is included. In calculating profit, some
ratio analysis
Findings Table of Contents Table of Contents * 1.0 Introduction ......................................................1 * 2.0 Findings .........................................................2-6 ? 2.1 Profitability Ratios.......................................2 ? 2.2 Activity Ratios.............................................3 ? 2.3 Liquidity Ratios.............................................4 ? 2.4 Gearing Ratios.............................................4 ? 2.5 Shareholder Ratios.......................................5 * 3.0 Conclusion.........................................................6 * 4.0 Bibliography ......................................................8 * 5.0 Appendix ......................................................9-13 ? 5.1 Easyjet and British Airways ratio calculation.............................................9 ? 5.2 Profit & Loss Account and Balance Sheet for Easyjet.............................................10-11 ? 5.3 Profit & Loss Account and Balance Sheet for British Airways.................................12-13 * 1.0 Introduction British Airways (BA) and Easyjet are two British airline companies. They are competitors in many aspects with different operational techniques. Easyjet is Europe's leading low-cost airline, which targets at both leisure and business markets on a range of European routes. It is one of Europe's
Sources Of Finance
Organisations in the private sector are split into four types of ownership structures, these are a sole trader, partnership, private limited company and a public limited company these businesses essentially need finance for many different reasons, these may be for long term or short term uses. The main types of financial backup that is needed for businesses are for starting a business up, expansion and development or maybe the business has just run out of money that is needed for it to be successful. There are many sources of financial help an organisation can turn to for funding and can be different depending upon the business ownership and structure as some are more appropriate for the need of the business than others. These are categorised as the providing of the financial fund can be obtained within the business and out side the business. Internal sources-These are the main types of financial help that most businesses can get access to freely. Limited companies use these more than other business ownerships. * Personal savings * Sale of assets * Retained profit * Working Capital External sources Ownership capital * Shareholders Non ownership capital, financial sources that are not shareholders. * Loans e.g. debentures * Overdraft * Hire purchase * Grants * Venture capital * Leasing A sole trader is the simplest and easiest type of business to set up as
Sources of finance
The recent financial crisis was a combination of bad financial risk management by the banks and poor government intervention on activities such as bank mortgages. This resulted in a global recession and the collapse of the financial and housing market. There have been recent signs of recovery from the recession such as the announcement by the BBC of 0.3% economic growth in the UK (BBC online, 2010). However, the banking sector feels small British firms are still at risk of being hit by the economic downturn in 2010. The aim of this essay is to discuss the further consequences small businesses face as a result of the economic downturn in 2010, the possible changes a small firm could make to their working capital in preparation for a period of falling demand. In addition, the advantages and disadvantages of reducing stocks in times of economic downturn. A recession is defined as 'a downturn in sales and production that occurs across most parts of the economy perhaps leading to six months of continuous economic decline' (I.Marcousé, 2008). In summary, the recent economic downturn was to an extent, caused by the collapse of the US housing and global financial market. Previous to the recession banks loaned money to individuals and businesses who were interested in purchasing property in the belief that value of the property will rise and in some reported cases lent more money
Sources of Finance
.0 Introduction Get Smart Sdn. Bhd. is a medium sized manufacturing company operating in Prai Industrial Zone. Its production capacity is unable to meet the order flowing in and they have decided to open a new plant in Kulim area, however they are unable to obtain funds for this expansion. Financing refer to the ability of organization to raise funds or capital for business activities and investment (http://www.answers.com/finance?cat=biz-fin). Financing is divided into long-term financing and short-term financing. Long-term financing provides capital funds for the period over one year whilst short-term financing provides funds for the period of 1 year or less (Ross 2001). Ross (2001) stated that long-term financing usually use for fixed assets, large equipment purchases, large scale construction process and expansion of facilities. In his text, he stated that short-term financing funds are usually for businesses to run their day-to-day operations including payment of wages to employees, inventory ordering and supplies. Long-term financing is an appropriate finance methodology for expansion since it falls within the scope of long-term financing. The basic sources of long term financing are equity finance and debt finance. Equity finance is the money acquired from small owners or other investors to run the business whilst debt financing is the money borrowed from
Types of communication
Types of communication Electronic - Email- Email is useful for a business, because it's easy and quick. For example if you need to send copies of you documents you can email it which is a quick process. You can also send an email worldwide and you can communicate with business people from outside the country. - Texting- Texting is useful for a business, because you can contact an employer who is not at work you can send the employer a text and remind the employer about important business appointments. - Fax- Fax is helpful for a business, because you can send and receive business documents, for example if you need to send a business contract you can fax the contract. - Video conferencing- Video conferencing is useful for a business, because you can talk to them face to face and you can discuss with them about any business issue. - PowerPoint presentation - PowerPoint presentation are useful for business, because you can present your work in PowerPoint to other companies. It's easy to use and it also looks professional. - Webcam- You can have a business meeting using webcam and you can see each other face to face. - Voice recorder- Voice recorders are useful for business people who want to record their meetings and ideas. They also can record and transfer information to their computer which will make it easy to manage and they can play back their voice. - Charts and
Unit 2 - Investigating Business
Business Applied Unit 2 - Investigating Business My name is André Gibbs, I am currently 18 years old and I live in South Norwood borough of Croydon. The name of my business will be Funky Catererz this name come from the love I have for funky music and different foods. My business will be a service based on catering for all types of occasions such as wedding, christenings, funeral and others. We will also cater in Caribbean food predominately Jamaican cuisine but also cater in all varieties of Caribbean. I will be running this business from home until expansion is need of my business. I feel that this would be the best business for me to start because I do not have to spend a lot to start up my business. I have a Business Communication GCSE qualification and A level qualification in business, ICT and English. For my business I have access to £20,000 as a limited amount to start off my business this is an advantage for my business because there are very low priced stores that sell cheaper goods. For a successful business it must have four very important sources which are known the four p's of business: * Place * Product * Price * Promotion Product I feel that my service would go far and make a profit because it comes with a range of fashion techniques not just customising also not many people have heard of services like mine in my location, this is what makes my
