Question:
A session reportis dillerenthem.
Session reports should contain Me studentname/shelentnumber.
For Mose, the MYOB version that generates Students, will be asked prI01 to out M1f.013 iltheywant.
You can access the Session report by clicking on these repo.
To be saved later, or immediately.
That are.
MINOT he recalled Ma later and reprinted Ma as they recorded only Me current session.
Failure to comply with these instructions may result is a zero-grade assignment.
Students must complete all Me transactions outlined in the!MOB Practice Setu Vow. They are also required to prepare a detailed financial report on the performance of the GROUP.
It should be prepared in the same way as an accountant.
or the partnership of Sp.
51,on The partners should be concerned about business operations such as immovim Profilabity and the market sharing paying Me bills.. and managing.. inventory..
after compiling aocounOng transactions into.etredve set.
Ma busing.. been successful as…whaledeg.
he impnwed. Students should submit in reponk, the sole trader, feasible recommendations that could help Ma busbass operations Dela.
Included should be information related to the recommendations.
Answer to Question: BFA714 Australian Tax Law
Sport station in Australia is a small company that deals in sporting equipment.
Its business is to buy and sell equipment.
The report includes an assessment of Sport station’s financial performance.
Report has been used to analyze financial activities in relation to the different statements that were used for their evaluation.
Report includes financial statement for sport station from October to the first of November.
MYOB software, which allows user to easily translate data from different financial statements has been used for analyses (Curtis 2015.
This software is suitable for small enterprises as it emphasizes the business process and flows.
You can use the following financial statements to analyse the financial performance and financial performance of sport stations: Balance sheet, Income statement, Profit and loss statement, summary list of inventories, reconciliation, session report and aged payables and receivables.Discussion:
Evaluation and analysis of Sport Station financial performance:
Sport station’s financial performance has been analysed using a quantitative tool. This involves analysing various ratios.
Ratio analysis helps investors as well the organization assess their financial position.
Numerous ratios were calculated including profitability, leverage and liquidity.
Each ratio is important and relevant (Brown (2016).
Because they are the basis of calculations, financial statements and figures from other sources are essential for the computation of the mentioned ratios.
A ratio analysis is used to demonstrate the organization’s vulnerability, sustainability, and growth.
Analysis Of Profitability Position
Calculating the profits earned can help determine the company’s profitability.
This ratio takes into consideration four different ratios.
This includes gross profit margins, profit margins, return equity and return to assets.
From October 2012 to November one week, the time for which the ratios were calculated varies.
The four computed ratios are shown in the following table:
Profitability Ratio
From October 2012 until November 2012
RatioOctober-2012November-2012
Change
Margin of Profit-2.100-355.96353.86
Margin for gross profit55.20649.25-5.956
ROA – Return on Asset6.9427.248-6.699
Return on Equity/ ROE18.635.6606-17.99
Table 1
Source: Created By Author
Gross profit margin
The graph illustrates that gross profit margins have decreased in the first weeks of November.
The October figure was 55.206%, while it was 49.25% the week before.
Continued expenses by the organization are the reason.
Margin of gross profit
Source: Created By Author
Profit margin
November’s first-week loss has seen an increase.
When compared with October month’s figure of 2.1%, loss was at 355.96%.
This is due to losses that result from the business activities.
Profit margin
Source: Created By Author
Return on equity
First week of November has seen a decrease in return on equity.
The figure was 0.66 in November, as opposed to 18.63 in October.
This indicates that the earnings of the company has decreased.
Return on equity
Source: Created By Author
Return on assets
ROA in November was at.248 compared to October value at 6.92.
This shows that the November return on assets has fallen and that assets cannot be efficiently used for revenue generation.
Return on assets
Source: Created By Author
Analysis of Liquidity Position
Liquidity ratio for sport station shows the liquidity position and any changes to it.
It is a measure of the company’s liquid assets available for fulfilling its obligations.
The five ratios that are used to calculate this ratio include the current ratio, receivable and quick ratios, as well as average collection periods and inventory.
Below is the table showing the ratios value.
Liquidity Ratio
From October 2012 until November 2012
RatioOctober-2012November-2012
Change
Current Ratio4.3365.274.938
Quick Ratio3.6143.7340.12Receivable Ratio (Times)1.011.027.017
Inventory Turnover (Times).2.58.102-2.478
Average Collection Period (Days).362.02355.08-6.94
Table 2
Source: Created By Author
Ratio Quick:
The graph shows clearly that November’s quick ratio has increased.
October value reached 23.614 against 3.73 in November.
This shows that current assets may be easily converted into cash, and can be done at a quicker pace.
Quick ratio
Source: Created By Author
Current ratio
The November fist week saw an increase in the current ratio of sports stations.
In October, the ratio stood at 4.33 compared to its November value of 5.27.
An increase in this ratio is a sign that current assets can be used to meet short-term liabilities.
Current ratio
Source: Created By Author
Receiveable ratio
Receivable ratio has risen, and this indicates that inventories convert at a quicker pace into sales.
It is clear that sport stations followed tighter credit policies for November.
Ratio was 1.02 in November, compared to 1.008 for October.
Ratio recevable:
Source: Created By AuthorAverage collection period:
November’s first week saw a decrease in average collection time.
It was 362 days compared with 355 in November month.
This shows that companies are getting less time to collect debtors, which is a great sign.Average collection period:
Source: Created By Author
Ratio of inventory turnover
Inventory turnover in November has decreased to.102 as compared to October’s 2.58.
This shows that inventories are less likely to be sold than previous months.
Ratio of inventory turnover
Source: Created By Author
Analyse of Financial Stability
Three ratios have been calculated in order to assess financial stability for Sport station.
These ratios consist of equity ratio, leverage ratio and debt ratio.
In the following table, you can see the values of each ratio.
Financial Stability Ratio
From October 2012 until November 2012
RatioOctober-2012November-2012
Change
Ratio of Debt.617.633.0.16
Equity Ratio.370.366-.004
Leverage Ratio1.661.706.046
Table 3
Source: Created By Author
Equity ratio
In both the first and second week of November, equity ratio remained constant at par.
The ratio has dropped in the first week November.
Lenders and creditors will be considered at risk in future loan repayments if there is a chance of default by a company.
Debt ratio
In the first week of November, the ratio of debt to income decreased.
When compared to the October value of.616, November’s value was.633 while October’s value was.616.
This indicates that more debt is in the company’s capital than equity.
This ratio shows how company’s debt burden is compared to its equity capital.
November saw an increase in this ratio.
Ratio stood at 1.706 for November, compared to 1.666 for October.
It is clear that the company has been using equity rather than borrowing money to finance its capital.Recommendation:
Organizations have been efficient in using current assets, as shown by quick and current ratio computations.
Sport station must reduce the collection period to avoid bad loans.
Instead of selling products to suppliers, cash sales should increase.
Customers should be able to avail several discounting services for quick sales.
It is necessary for companies to use their assets properly in order to reduce the return of assets.
The company’s overall leverage ratio has increased as shown by the following figures.
For capital financing, it is best to use equity financing instead of borrowing.Conclusion:
As you can see, Sport station has experienced net loss both in November and October.
Sport station needs to take measures to decrease the costs and expenses that are incurred for recovering their net loss.
They need to be reliable on loan and should look to reduce borrowing and issue equity shares to fund capital.
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