Analyzing – Coursework Example
ANALYZING TOPIC ONE The data will be analyzed using the financial scorecard tool. The financial score card will enable analyzing of financial ratios hence providing a unique picture of a company’s financial position. This is shown below:
Financial ratio data will be used by business owners to evaluate the performance of the business and to identify potential problems. The government will also use the data to know the amount that will be taxed on company’s profit. In addition, investors will also use the financial ratio data to determine whether they will invest, continue investing or withdraw their investment from the company. Current ratio is used to evaluate the short-term solvency position of a business and it is given by :
The company’s growing concern is given by the net income because the net income shows the performance of the company during a certain time period. Financial ratio data are useful in evaluating performance of the business. However, one of their big limitations is they are characterized by estimation and assumptions.
The labor costs are contained in the income statement of the company because income statements tell those outside the company just how things are actually going. Quality in production is often influenced by the type of raw materials used. Most companies will go for high quality raw materials provided they get value for the price. In other words, cheaper goods are associated with low quality. In this regards, Benefit Corporation will be limited to buy cheaper goods because of the fear of getting low quality materials hence low quality products. A manager will be prepared to incur more high cost he/she needs to incur more direct labor cost in order to comply with the production deadlines. This is because labor is a factor of production and adds directly to the production cost. Increasing direct labor costs increases production costs.
The company reported a detailed analysis of cost during the 2013 financial year. The product cost reported was around $2.5 billion for production. According to the company, the cost of product sold is basically comprised of direct materials and supplies consumed in the manufacturing of product in addition to depreciation, manufacturing labor and direct overhead expense necessary to produce the finished product. The product cost also comprised of inbound freight costs, cost of distribution, warehousing costs, internal transfer costs and other shipping and handling activity. Detailed reporting and stating of the figure was necessary for accountability of how the company’s resources have been used in production.
Bull, R. (2008). Financial ratios: How to use financial ratios to maximise value and success for your business. Amsterdam: Elsevier/CIMA Pub.
Blumenfeld, D. E., & General Motors Corporation. (1984). Analyzing trade-offs between transportation, inventory and production costs in freight networks. Warren, Mich: General Motors Research Laboratories.
Triplett, J. E., & Conference on the Measurement of Labor Cost. (1983). The Measurement of labor cost. Chicago: University of Chicago Press.