Methods of Accounting Ratios - Essay Example

The structure of the assignment envisages a maître body, which will be divided into different sections based on the topic to be covered and each section will be arranged under a separate subheading. This way, it will become clear as to who is required to read the report.

Activity 2 encompasses lyrical and in-depth research on accounting ratios for December. This has then been compared and contrasted with data pertain about. An analytical review of the history of trading from August-December has been conducted with the aid of graphs, tables, and the relevant evidence has been shown by referring back to the graphs and tables. Subsequently, based on the recommendations endorsed in Activity 1, clear evidence is presented to show the effectiveness of the action plan was. This, again, will be divided into three main bodies including Accounting Ratios, History, and the evidence of a successful Action Plan.

An investigation of this nature will help the company to determine its current organizational and operational anomalies that have contributed to a fall in its profitability. An analysis of various accounting ratios spanning over several months, which is one of the aims of this study, will help them to identify problems that have contributed to this phenomenon. In addition, it will also enable them to pinpoint the source of the problems so that they can take appropriate measures to address them adequately. Therefore, this study envisages a thorough analysis of various financial statements of the company right from January to June by applying an analysis of various ratios. Once the relevant ratio analyses are undertaken and the necessary data is obtained, the study will dwell in detail on different measures that will enable the company to attain profitability. Based on the finding of the study, appropriate recommendations will be endorsed, and by complying with these suggestions and other requirements specific to the company, they can address the present problems that are pestering them and attain better profitability. In addition, the suggested measures will also help the company to sustain profitability in the long run.

A liquidity Ratio is a financial ratio, which is used to determine a company’s ability to pay off its short-term debt obligations. A higher value of the ratio indicates a positive outlook for a company. In other words, this shows a larger margin of safety that the company possesses to cover its short-term debts and liabilities.