The Role of Chairman in Jools Furniture Industries Limited - Case Study Example

The financial statements of each division consisting of the income statement and statement of financial position may be used to understand the profitability, efficiency, liquidity and gearing or leverage position of the company (Atkinson, Anthony, et al, 2005; Bernstein, 1993; Byars, 1991) in relation to what the industry and economy may allow or offer (Dornbusch, and Fischer, 1990, Samuelson and Nordhaus, 1992).By understanding each of the division’s profitability, efficiency, liquidity and solvency position, there is a basis to determine whether the company could continue or not in the future in making further expansion (Helfert, 2001).

The information could be used to eliminate which of the division if the same is not performing its contribution to the profitability of the group holding company. A division that continues to lose money does not deserve to continue (Helfert, 2001).The information same could be used to assess whether the present system of planning, control and performance measurement is working for the company. As holding company it has four divisions: The Quality Products Division, the Kitchen Division, The Bedroom Division and the Office Division.

This would be however discussed in the second question (Case Study, n.d.).Each of division was found profitable except for Quality Products division using return on assets (ROA) and return on equity (ROE) as bases. chance terms of return on assets (ROA), Quality Products Division has shown 3%, 2% and -9% for the years 2009, 2008 and 2007 respectively or an average of -1% which is lowest among the four divisions the only one with the negative average. Kitchen Division, on the other hand, exhibited ROA of 8%, 7% and 11% for the same years respectively or an average of 9%, making it the highest together with Office Division which showed yearly ROA of 10%, 9% and 9% for the same years respectively.