Develop a range of comparative key performance ratios

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Reference no: EM133432628

Question: You are initially working with a selection of small businesses that have been trading for three years and which now need annual trading statements to be compiled and submitted in line with government requirements.

You have been given:

? A (10 column) trial balance of a business, including receivables, payables, revenue and expenses. See Table 1 for details.

Specifically, you will undertake the following:

The businesses do not make use of contemporary software to support book-keeping and local accounting function. This is something which concerns you as you feel that it represents an opportunity for the business to save time and resource.

Your supervisor, one of the firm's Main Account Managers, has asked you to compile the year- end financial statements ready for submission and provide, for each client, some detailed analysis of the figures produced, which will be presented in the form of an accompanying letter.

From the data provided, you are required to prepare the year-end financial statements, taking into consideration accounting principles, conventions and standards. You will need to make and show appropriate adjustments to both the income statement and the balance sheet.

You will also need undertake the following:

? Develop a range of comparative key performance ratios for both periods. They are:

a. Liquidity Ratios:Current Ratio and Quick Ratio.

b.Asset Management Ratios: Receivables Turnover; Average Collection Period; Asset management turnover ratios; Inventory Turnover Ratio; Fixed Asset Turnover and Total Asset Turnover.

c. Debt Management Ratios: Debt to Assets Ratio and Times Interest Earned Ratio

d. Profitability Ratios: Net Profit Margin; Return on Assets and Return on Equity

You are to compare the performance of Smart Trading over time, ie 2020 & 2021, using financial ratios and evaluate the performance of an organisation over time using financial ratios with reference to relevant benchmarks

Reference no: EM133432628

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