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Accounting Assignment Question
Small Business Analysis 1:
The following financial statements were prepared for the management of TEDA Ltd. The statements contain some information that will be disclosed in Additional Information at the end of the general purpose financial statements.
1. The balances of certain accounts at the beginning of the year are:
2. Total assets and total equity at the beginning of the year were $387,500 and $190, 500 respectively.
3. Income tax expense for the year was $31,500. Net finance expenses were $3150.
Based on the information provided above, identify and calculate the principal ratios that a financial analyst might use that would give some indication of the following:
a. the entity’s earning ability
b. the extent to which internal sources have been used to finance asset acquisitions
c. the rapidity with which accounts receivable are collected
d. the ability of the entity to meet unexpected demands for working capital
e. the length of time taken by the entity to sell its inventories.
Small Business Analysis 2:
The following ratios have been calculated for TUST Pty Ltd, an entity specialising in imported exotic perfumes.
The ratios indicate an increase/decrease from the previous year.
Classify and discuss each of the ratios and explain what these ratios indicate about the entity’s liquidity, asset efficiency and profitability?
Students are encouraged to do some research and find out what an increase/decrease in the ratio indicates, what the business could be doing that has resulted in the change, and is this change favourable or not?
Where possible you should provide a brief recommendation and lastly do not forget to reference and support your reasoning