P2: Carry Out Analysis of the Business Using Comparative Measures of Performance

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P2: Carry out an analysis of the business using comparative measures of performance. One of the keys to success of the World Beat Fitness Center is the ability to offer reasonably priced programs. The club has increased the size of its fitness center and added more equipment that gives full satisfaction to all members. They are exposing everyone to the variety of activities and services the club offers. Analysis of the business financial statement particularly the assets and liabilities are computed below: GROSS AND NET PROFIT MARGIN ANALYSIS Net profit margin is one of the profitability ratios and an important tool for financial analysis. It is the final output any business is looking out for. Net profit ratio is a…show more content…
Similarly, in case of 6, the money is realized after long 6 months. For better trade credit management, it is obviously desirable to realize the money as soon as possible because the money which is blocked in the debtors has a cost of interest attached to it whose driver is ‘Time’. If time to realize the money from debtors is more, the cost is also higher and vice versa. Low debtor’s turnover ratio directly insists on higher working capital requirements and therefore higher interest cost which decreases profits of the firm. CURRENT RATIO ANALYSIS Current ratio is a critical liquidity ratio utilized extensively by banks and other financing institutions while extending loans to the businesses Current ratio is a figure resulted from dividing current assets by current liabilities of a firm. Current ratio = Current Assets 2009 -------------------------- Current Liabilities = BD 60 000 -------------------------- BD 40 000 = 1.50 : 1 or 150% ============== Current ratio = Current Assets 2010 -------------------------- Current Liabilities

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