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Compute for each company the following Current & acid test ratio for assessment of liquidity of both companies Gearing ratio for assessment of gearing for both
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Reviewing the financial statements of Company ABC and Company XYZ below, each student is required to: (a) Compute for each company the following: (40 Marks) (i) Current & acid test ratio for assessment of liquidity of both companies (ii) Gearing ratio for assessment of gearing for both companies (iii) Ratio analysis to compare the efficiency of both companies (iv) ROCE, gross and net profit margin for assessment of performance and return on investment for both companies (b) Compare and comment on the performance, efficiency, liquidity and gearing ...Solution Preview:
Both the company ABC and XYZ is a profit making company. For the current year both the company has made good profit. Let us analysis the performance and efficiency of both the company with the help of ratio:
- Gross Profit Margin Ratio: Gross Profit Margin is the ratio which calculates the percentage of gross profit earned by the company over its revenue.
This report aimed to develop a critical understating of the various accounting software by evaluating the cloud-based accounting software in regards to businesses and then suggest the most appropriate accounting software to a chosen company such as Woolworth. The findings of the current report reflected that the company has key activities like manage, organize, maintain its store staff, develop various strategies for the business, billing for their products, maintain their transactions, and records them and handle their conflicts, etc. Similarly, its other activities related to revenue and expenditure cycle also includes sales and purchase related practices. Moreover, some internal controls are found weak in Woolworth due to which company has risks like segregation of duties, major frauds, poor corporate governance, improper monitoring of managerial opportunistic behavior.
This report aimed to develop a critical understating of the various accounting software by evaluating the cloud-based accounting software in regards to businesses and then suggest the most appropriate accounting software to a chosen company such as Woolworth. The findings of the current report reflected that the company has key activities like manage, organize, maintain its store staff, develop various strategies for the business, billing for their products, maintain their transactions, and records them and handle their conflicts, etc. Similarly, its other activities related to revenue and expenditure cycle also includes sales and purchase related practices. Moreover, some internal controls are found weak in Woolworth due to which company has risks like segregation of duties, major frauds, poor corporate governance, improper monitoring of managerial opportunistic behavior.
