Assume that the chief financial officer (CFO) has asked you to analyze the use of company assets and make recommendations for revenue generation and increasing profitability. The CFO has requested you summarize your findings in a 250-500 word memo addressed to the CFO, but one that could be shared with other stakeholders.
In the Form 10-K for the company you selected in the Topic 1 assignment, review and study the assets as reported for the past 3 years. Using the correct formulas and a separate tab for each analysis, calculate the following ratios using Excel.
Receivables turnover
Average collection period
Inventory turnover
Average days in inventory
Asset turnover
Using the results of your ratio calculations, provide recommendations about how to improve one of these assets: receivables, inventory, or property, plant, and equipment for the company, as a means of generating revenue and increasing profitability. Include discussion and explanation of the following within the memo.
Summarize how well the company is collecting on its receivables based upon the type(s) of products the company sells and the industry in which it competes. Justify your speculation by using supporting facts from the income statement, balance sheet, or other resources.
Summarize how effective the company is in managing inventory based upon the type(s) of products the company sells and the industry in which it competes. Include discussion about whether the inventory turnover ratio is increasing or decreasing, what is causing the ratio increase/decrease, and whether the total value of inventory is increasing or decreasing on the balance sheet.
Summarize how well the company is utilizing its assets to generate net income. Justify your assessment with examples of other ratios and values on the income statement and balance sheet.
Make a recommendation to improve one of these assets: receivables, inventory, or property, plant, and equipment. Use information from the ratio calculations, income statement, balance sheet, or other resources to justify your recommendation and explain how accepting the recommendation will generate revenue and increase company profitability.
Sample Solution
shareholders and different corporations particularly personnel with an hobby in the company. as a result, the formal position of management is that it is underneath a duty to sell the interests of âthe enterprise as a wholeâ, which is taken to include personnel, lenders, suppliers and costumers. Stakeholder idea is in juxtaposition to company concept. Stakeholder principle takes account of a much broader organization of parts instead of specializing in shareholders. A outcome of focusing on shareholder is that the maintenance or enhancement of shareholder value is paramount, whereas when a much wider stakeholder group including employees, companies of credit score, customers, providers, authorities, and the local people is taken under consideration, the overriding focus on shareholder cost becomes much less self-obvious. The stakeholder principle rejects the concept of income maximisation as a unmarried outcome. Failure to undertake ideas of the United Kingdom code may also suggest a breach of a directorâs duties beneath ss. 172-a hundred seventy five of the businesses Act 2006. For the primary time, the elements relating to the company governance in particular the function of the board of administrators to promote the achievement of the organisation have codified in part 10, subsection 172 of corporations Act 2006. It states that âpromote the fulfillment of the agency for the gain of its contributors as a wholeâ. It calls for administrators to have regard to more than a few pastimes in discharging their obligation to promote the fulfillment of their agency. thus, it is viable to say the agencies Act 2006 brought a broader method to companies with subsection 172. however, despite the fact that the provision seems to floor on stakeholder-orientated, this is not to say the United Kingdom company law converted from a shareholder-oriented to a stakeholder-oriented device, to decide what’s the gain for the shareholder is as much as the directors, not the courts. Lord Eldon LC in Carlen v. Drury addressed that âcourt is not required every time to take the management of each playhouse and Brewhouse within the kingdomâ. constant to this Jonathan Parker J In Regentcrest % v. Cohen expressed that âthe query is whether the director without a doubt believed that his act or omission turned into within the interests of the company. the problem, consequently, pertains to the directorâs country of thoughtsâ. but, it suggests that powerful safety of the pastimes of diverse stakeholder agencies has long been included into the United Kingdom technique to regulating the behavior of administrators. As referred to above, the United Kingdomâs gadget based available on the market for control, but in internal monitoring is inside the forefront in Germany. besides, at the least in theory, internal monitoring ought with a view to respond more quick to managerial failure, and be better able to comprehend it than the market. To promote the pastimes of all stakeholders, in other phrases, to promote the interests of âthe business enterprise as an entire, in the enterprise Germany has the two-tier board, a management board (Vorstand) and a supervisory board (Aufsichtsrat), system. The feature of the supervisory board which is composed both shareholders and employees are representatives is to oversee the companyâs management. The crucial factor approximately the 2-tier board is obligatory despite taking part of the German company Governance Code and the size of the supervisory board is set via regulation and cannot be modified with the aid of shareholders. however, corporate governance is established on a one-tier version in the uk, the control runs every day sports even as some executives also are individuals of the board of directors. The German equivalent of non-executives, which has an crucial role inside the united kingdom corporate governance, are segregated from their executives and they have an independent board that’s supervisory board. comparison this with the United Kingdom where non-executives sit together executives on a single board. The discussion of one-tier boards within the united kingdom is more and more focused on strengthening the role of non-government directors. The position and effectiveness of non-govt directors have attempted to be more effective with the Higgs review. The Higgs review became an unbiased assessment of the role and effectiveness of non-government administrators led by Derek Higgs, on behalf of the UK government. The factors of non-executive administrators can be described as part-time, outside, and unbiased. Provisions about non-executives still exist inside the uk company Governance Code. the main point of these provisions is to make certain that the government administrators are appearing consistently with shareholdersâ hobbies. In different phrases to create a stability between government strength and non-govt energy. The Higgs evaluation encouraged that one of the non-government administrators needs to be appointed as a senior impartial director and a senior unbiased director need to attend the meeting with several instances. the primary idea of the senior independent director is to make a connection among shareholders and the board and it>
shareholders and different corporations particularly personnel with an hobby in the company. as a result, the formal position of management is that it is underneath a duty to sell the interests of âthe enterprise as a wholeâ, which is taken to include personnel, lenders, suppliers and costumers. Stakeholder idea is in juxtaposition to company concept. Stakeholder principle takes account of a much broader organization of parts instead of specializing in shareholders. A outcome of focusing on shareholder is that the maintenance or enhancement of shareholder value is paramount, whereas when a much wider stakeholder group including employees, companies of credit score, customers, providers, authorities, and the local people is taken under consideration, the overriding focus on shareholder cost becomes much less self-obvious. The stakeholder principle rejects the concept of income maximisation as a unmarried outcome. Failure to undertake ideas of the United Kingdom code may also suggest a breach of a directorâs duties beneath ss. 172-a hundred seventy five of the businesses Act 2006. For the primary time, the elements relating to the company governance in particular the function of the board of administrators to promote the achievement of the organisation have codified in part 10, subsection 172 of corporations Act 2006. It states that âpromote the fulfillment of the agency for the gain of its contributors as a wholeâ. It calls for administrators to have regard to more than a few pastimes in discharging their obligation to promote the fulfillment of their agency. thus, it is viable to say the agencies Act 2006 brought a broader method to companies with subsection 172. however, despite the fact that the provision seems to floor on stakeholder-orientated, this is not to say the United Kingdom company law converted from a shareholder-oriented to a stakeholder-oriented device, to decide what’s the gain for the shareholder is as much as the directors, not the courts. Lord Eldon LC in Carlen v. Drury addressed that âcourt is not required every time to take the management of each playhouse and Brewhouse within the kingdomâ. constant to this Jonathan Parker J In Regentcrest % v. Cohen expressed that âthe query is whether the director without a doubt believed that his act or omission turned into within the interests of the company. the problem, consequently, pertains to the directorâs country of thoughtsâ. but, it suggests that powerful safety of the pastimes of diverse stakeholder agencies has long been included into the United Kingdom technique to regulating the behavior of administrators. As referred to above, the United Kingdomâs gadget based available on the market for control, but in internal monitoring is inside the forefront in Germany. besides, at the least in theory, internal monitoring ought with a view to respond more quick to managerial failure, and be better able to comprehend it than the market. To promote the pastimes of all stakeholders, in other phrases, to promote the interests of âthe business enterprise as an entire, in the enterprise Germany has the two-tier board, a management board (Vorstand) and a supervisory board (Aufsichtsrat), system. The feature of the supervisory board which is composed both shareholders and employees are representatives is to oversee the companyâs management. The crucial factor approximately the 2-tier board is obligatory despite taking part of the German company Governance Code and the size of the supervisory board is set via regulation and cannot be modified with the aid of shareholders. however, corporate governance is established on a one-tier version in the uk, the control runs every day sports even as some executives also are individuals of the board of directors. The German equivalent of non-executives, which has an crucial role inside the united kingdom corporate governance, are segregated from their executives and they have an independent board that’s supervisory board. comparison this with the United Kingdom where non-executives sit together executives on a single board. The discussion of one-tier boards within the united kingdom is more and more focused on strengthening the role of non-government directors. The position and effectiveness of non-govt directors have attempted to be more effective with the Higgs review. The Higgs review became an unbiased assessment of the role and effectiveness of non-government administrators led by Derek Higgs, on behalf of the UK government. The factors of non-executive administrators can be described as part-time, outside, and unbiased. Provisions about non-executives still exist inside the uk company Governance Code. the main point of these provisions is to make certain that the government administrators are appearing consistently with shareholdersâ hobbies. In different phrases to create a stability between government strength and non-govt energy. The Higgs evaluation encouraged that one of the non-government administrators needs to be appointed as a senior impartial director and a senior unbiased director need to attend the meeting with several instances. the primary idea of the senior independent director is to make a connection among shareholders and the board and it>
