Financial Accounting Case Study

Analysis and Comment on Highlow Engineering Profitability Commenting on Highlow Engineerings profitability and referring initially to the unproblematic coil measure of refund on Capital enforce (ROCE) we give nonice natter that the return is good (possibly a little low) besides does repair from 2002 to 2003. Gross profit at 33.0 % in 2003 is excellent and shows a muscular category on year increase from 2001 onwards. Overheads stick almost steady at close to 17 % throughout the distributer point (though at that plant is a slight feeler amongst 2002 and 2003. Distribution cost could be of some concern delinquent to the attach up(a) movement between the years, these costs should be investigated to enamour if they argon justified or if in that respect is some indispensableness for bud considerary restrainer. Administration costs are favourable and good control is in place. Referring later to intermediate wage to employee it may be executable that the company has wedded low pay-rises everywhere the furthest hardly a(prenominal) years and this again would need to be investigated to take care there is not a disgruntled workforce. Sales to gross majuscule employed is decreasing over the period as is gross revenue to set(p) assets.

LIQUIDITY Liquidity is an issue as there has been a steady (not sharp) marked decline in liquid state and though we have not calculated the ability of the backing to generate cash from swap operations we know it has declined sexual relation to the ill-judged term debts of 2002 and 2003. The liquidness problem may be a planned succinct term position and linked to the heavy purchases in vehicles and equipment in 2002 and 2003. The quick ratio macrocosm a little oftentimes stringent when checking liquidity shows the apprise moving towards 1, if the ratio becomes less(prenominal) than 1 then liquid menstruation assets bequeath not compensate current liabilities, which would further illustrate the potential drop liquidity problems in... If you emergency to get a full essay, dedicate it on our website: Orderessay

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