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Liquidity and Working Capital - Case Study Example

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This study describes seek the international expansion and enter into new and untapped markets in order to achieve growth. And also describes how the development of innovative and creative products which can be used in different markets with a diversified range of uses in various industries…
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Liquidity and Working Capital
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Download file to see previous pages A closer look at the vertical analysis of the data would suggest that the cost of sales continued to decline as the % age of sales. This indicates that the firm has been able to control its costs and improve the profitability. As a result of this decline into the cost of sales, the gross profitability of the firm has also improved too. Distribution expenses of the firm have increased over the period of time also indicating that the firm’s sales may have been increased at the expenses of incurring the higher distribution expenses. What is also important to note that the firm has been able to reduce its general/admin expenses indicating that the firm has been able to rationalize its organizational structure and control its costs? Operating profit and the net profit of the firm has increased too as a percentage of the sales indicating that the firm has been able to make profits over the period of time due to further cost rationalization as well as the cost-cutting.
It is also important to note that the firm has been able to reduce its current assets indicating that the firm has been able to manage its inventory as well as other current assets in a better manner. Reduction of current assets as %age of total assets also indicates that the firm has been able to rationalize its working capital management since current assets are mostly unproductive in nature. Firm’s accounts payables have increased too as a percentage of total assets indicating that the firm might have been able to improve its working capital management.
Data further indicate that the firm’s overall performance is satisfactory and trends indicate that the firm has been performing well. However, there are still certain areas which require critical evaluation in order to ensure that the firm performs well and its performance remains sustainable over the period of time. The current ratio of the firm has decreased initially, however; it is also increasing whereas the quick ratio of the firm is still above 1 which is a good sign of the firm’s better financial management. ...Download file to see next pagesRead More
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