Business accounting Essay Example | Topics and Well Written Essays - 1000 words

Business accounting - Essay Example Financial ratio analysis enables decision makers to uncover trends in business performance and compare different business organizations (Keown, et. al 2005). It should be noted that these ratios are classified according to the aspects that they measure including profitability, liquidity, efficiency, solvency, and investor ratios. Considering that the business organization under consideration is considered small and medium business organization, this report will focus only on profitability, liquidity, and efficiency. In terms of liquidity, the current ratio and the acid-test ratio will be utilized. At first look, the Northern Branch displays a slightly higher level of liquidity with its current ratio of 1.060. Should all of its current liabilities become due immediately, The Southern Branch will only be able to pay off 99.6% with its current assets. However, the acid test ratio shows that most of the Northern Branch's most current assets are tied up in inventories. In fact, when inventory is deducted from the current assets, it will only yield an acid-test ratio of 0.34. On the other hand, the Southern Branch has much more liquid assets indicated by its acid test ratio of 0.54. In terms of efficiency, the following ratios will be considered: debtor's turnover; debtor days; creditor's turnover; creditor days; and stock turnovers which will be divided according to the main inventories namely, food and beverages. The Northern Branch has a lower debtor's turnover leading to higher debtor days which indicates the collection period of account receivables. During the fiscal year, the branch reports debtor's turnover of 9.30 and debtor days of 39.21. On the other hand, the Southern Branch appears to be more efficient in collecting its receivables with its debtor's turnover of 12.13 and debtor days of 30.08 days. It is also apparent that the Southern Branch is relatively better in servicing its short term creditors as indicated by its higher creditor turnover and lower creditor days. The branch's creditor's turnover reported is 6.09, far better than Northern Branch's 1.74. This is translated to creditor days of 59.85 (Southern Branch) which is very much faster than Northern Branch's payment period of 208.63 days. In terms of inventory management, the Northern Branch still lags behind the Southern Branch both in food and beverages. The Southern Branch's stock of food turns at an average of 17.24 annually and stays in the company's warehouse in a period of 21.17 days. On the other hand, the Northern Branch's turnover averages 5.66 times a year while stock days is 64.39. The same is true with beverages. While the Southern Branch has a turnover of 3.05 and stock days of 119.54, the Northern Branch is not able to sell its beverage stocks for the fiscal year. It stays in the company's warehouse for more than a year (593.39 days) before it is finally sold. To measure profitability, this report will look at the return of capital employed (ROCE), gross profits, and net profit. The Southern Branch reports higher ratios in all these categories. The branch has an ROCE 0.36 compared to the Northern Branch's 0.26. In terms of profit margins, the Southern Bra

Faisal -business development of small-scale businesses in saudi arabia Dissertation

Faisal -business development of small-scale businesses in saudi arabia - Dissertation Example A brief scan of the important theories and the challenges to them are as follows: Firm size: According to Schiffer and Weder, the prevailing assumption is that SMEs have more problems than large firms because of their size. The reasons favoring large firms include economies of scale and entry costs; political influence; and greater visibility. Life Cycle vs Age: Masurel & Montfort (2006) analysed the stages in the life cycle of small and medium scale enterprises, in particular in the professional services sector, and distinguishing one stage from the other. Four stages were distinguished – starting; growth; maturity; and decline. First three stages show a diversification in sales, increase in differentiation of labor force, and increase in labor productivity. In the last stage, all these measures decrease. These stages, rather than the firm’s age, are what determine its growth. ... As to innovativeness as a factor in itself, Masurel, et al (2003), Nijkamp (2000) found that the element of leadership fosters creativity in the management of SMEs are determinative of innovative behaviour. Structure: Laforet and Tann (2006) and Tidd, et al. (2001) state that there is a highly significant difference between structure and innovation. This indicates that innovation does not develop well under hierarchical structures, mainly because of high levels of bureaucracy, and flatter SME structures tend to lead to more successful innovative efforts. On the other hand, Wei Xiuli and Juan Zhao (2009) qualifies this, stating that the optimum line structure of SMEs should take into consideration the typical organizational structure of the industry, the maturity of the firm, the specific stage it is in, and other factors that impact on the firm’s performance. Strategic Alliances: Booz, Allen & Hamilton, (n.d.) showed in their studies that SMEs will benefit through the establis hment of cooperative arrangements with other organizations and businesses. Joining forces helps ease expenses by sharing expertise, assets, expenses, and risk without the need for cash, debt or trading equity. In many instances, cooperating groups resort to bartering. Research objectives It is understandable that small and medium scale industries are seldom made the topic of academic research, because of the many factors that are perceived to influence this segment of the business, the studies appear to be fragmented in that so many assumptions are made as to the type of industry and the specifications of the company (high-tech or low-tech, service or manufacture, start-up or mature, mass production or custom designed, and so forth). This study therefore