Tma2
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- Date Submitted: 01/07/2014 04:50 AM
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TMA 03
Question 1
A) An income statement should determine a business’s past financial performance over a period of time, usually a year, enabling it to then predict the future financial performance of the business. This will allow Michael to see the predictions, and enabling him to know what he can and cannot afford to finance. However this is all dependent on making the expected profits. This will show his expenses, where he is losing money, net profit and where the business is getting its revenue.
B) A business essentially needs to make a profit; my biggest concern looking at these figures would be that both the gross and net profit were less in 2013, than the previous year. The company have also made less sales this year, it would be vital to look into this and see why. This may be dependent on the customer, we are aware that the company can charge 40% to retailers whom will buy large quantities. If this is the customer rather than the direct customer although this is beneficial in selling large quantities, the company loses 40% of their potential profit. In 2013 the business has a larger amount of opening stock, the business also has made more purchases yet the closing stock still remains higher than the previous year. The company need to get out of their debts and unfortunately in my opinion the business will remain in them if it continues this way.
Question 2
A) The balance sheet shows all of the businesses assets, essentially showing how much the company are worth. This also shows the businesses liability and equity. This is useful for the business owner to acknowledge if any adjustments need to be made. Creditors also use balance sheets to determine whether or not a business should be given credit and at what percentage. The balance sheet helps to compare progress against other dates, Michael will be able to see where hes going wrong and in what way. He will be able to see where he cannot afford to spend more money and where he will be...
Question 1
A) An income statement should determine a business’s past financial performance over a period of time, usually a year, enabling it to then predict the future financial performance of the business. This will allow Michael to see the predictions, and enabling him to know what he can and cannot afford to finance. However this is all dependent on making the expected profits. This will show his expenses, where he is losing money, net profit and where the business is getting its revenue.
B) A business essentially needs to make a profit; my biggest concern looking at these figures would be that both the gross and net profit were less in 2013, than the previous year. The company have also made less sales this year, it would be vital to look into this and see why. This may be dependent on the customer, we are aware that the company can charge 40% to retailers whom will buy large quantities. If this is the customer rather than the direct customer although this is beneficial in selling large quantities, the company loses 40% of their potential profit. In 2013 the business has a larger amount of opening stock, the business also has made more purchases yet the closing stock still remains higher than the previous year. The company need to get out of their debts and unfortunately in my opinion the business will remain in them if it continues this way.
Question 2
A) The balance sheet shows all of the businesses assets, essentially showing how much the company are worth. This also shows the businesses liability and equity. This is useful for the business owner to acknowledge if any adjustments need to be made. Creditors also use balance sheets to determine whether or not a business should be given credit and at what percentage. The balance sheet helps to compare progress against other dates, Michael will be able to see where hes going wrong and in what way. He will be able to see where he cannot afford to spend more money and where he will be...