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Financial analysis for Performance management - Research Paper Example

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The ratio calculated for the period ended 26 July 2014, that is, the current ratio shows the enhanced capacity of Game Digital plc to meet its short-term financial obligations as and when they become due. Compared to the previous year before the merger, the company was in a…
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Financial analysis for Performance management
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Download file to see previous pages After the merger, there is a substantial increase in the companys capital as well as a decrease in the liabilities. It shows that the company position to meet its financial obligation has improved after the merger.
The equity multiplier calculated for the period before the merger shows that the company had funded a huge share of its assets using debts. After the merger, the company gets the additional capital that boosts its books, but still ratio remains relatively high.
The interest cover ratio for the period the merger shows the company was not in a position to pay it interests obligation, the company made a loss. In the period after the merger, the period ended 26 July 2014, the company is in a better position to cater for its interest obligations though there are more interest obligations as results of the increase in debts.
The gross margin shows the portion of the total sales that is left out after accounting for the direct costs related to the production of the goods and services. The gross margin ratio is within an acceptable range. There is increased in sales revenue in the period ended revenue in the financial year ended 26 July 2014 and point to a more efficient selling capacity.
The fixed asset turnover ratio calculated is seen to increase over the period. The higher ratio in the period after the merger shows that the efficiency in utilising the fixed asset to generate sales has improved.
During the period that ended 27 July 2013, the company was in a very poor position to meet its financial obligation. The company made a loss. After the merger, that is, the period that ended 27 July 2013, the company made a profit and can then be able to meet its financial obligations as and when they become due for payment. Therefore, the lender can now confidently trust to lend the firm without risking default. To the company management, I recommend they ensure the profitability trend is ...Download file to see next pagesRead More
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