Financial Position Of The Company

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Task No. 1: Financial position of the company can be calculated by following some advance techniques of the financial accounting. ACME(Retail) Ltd is using the old methods which are not as good as the new ones are because they can cover only few areas. PERFORMANCE: North Segment: As we can see that north part has better geographical location and the infrastructure is also very good that’s why it is making good profits. From the Du-pont Analysis it is clearly visible that return on assets is increased from 0.47 to 0.65, net profit margin increased from 0.41 to 0.56 and total asset turnover also increased from 1.14 to 1.15. The result of return on total asset variation has increased from .0575 to .0775 from year 2013 to year 2014. Operating…show more content…
So it can be concluded that there are some problems to be discussed to overcome extra costs. (Davis, H.Z, N. Khan and Rosen E 1984) South Segment: From the analysis we can say that return on assets and net profit margin has increased marginally. But on the other hands total asset turnover has declined from 1.15 to 1.14 from year 2013 to 2014. The reason is the company is not using its assets properly because of the poor infrastructure and light population. Probably they are having more stock at hand than they actually need. That extra stock can be used in north segment. Inventory turnover has decreased from 2.74 to 2.68 from year 2013 to 2014. The increase in the ration that have been calculate in the Appendix 1 is very marginal as compare to the above two segments. This means that the segment’s performance is bad. West Segment: Performance of the segment is very poor. Return on assets and net profit margin has decreased sharply from year 2103 to year 2014. But it is using its assets better than south segment as there is marginal increase total asset turnover. There are some changes that need to be made to make it better. Inventory turnover has decreased from 1.9 to 1.85 from year 2013 to 2014. There are lots of problems to be discussed in this segment. We can say that by looking at the income statement shown in appendix 4 that the variable cost is very high in both of the give year. On the other hand ending inventory is also high that mean
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