Financial Management & control Essay Example | Topics and Well Written Essays - 2750 words

Financial Management & control - Essay exemplarThe club has not been able to earn more from the bullion of its sh beholders. In 2011, it has earned approximately 30% lesser than 2010 from the money invested by its shareholders which resulted in a decline in return on equity. The debtors compendium rose by 47 days over the previous year which means that in 2011, the order now required 130 days to get the money from its debtors which it did in 83 days in 2010. This not only blocks the money for the order but also applys the company lose on the delight of the money blocked with the debtors. The chance of the debtors going bad also increases if the payment cycle expands which has been proved by bad debts going up by more than 200%. The operating profit of the company has halved from 17% in 2010 to 8.5% in 2011, which implies that even when the company has sell more than the previous year, it has not been able to make profits out of the sales. This can be due to many reasons. The company might have sold at lesser price or the company might have incurred greater selling expenses. ... The watercourse ratio of the company increase from 1.5 in 2010 to 1.8 in 2011. The increase in the current ratio is a result of the increase in current assets which includes an increase in the debtors collection period due to which the debtors are rising, an overdraft bank vestibular sense and more than doubling of bad debts inflating the current ratio. The acid test ratio increased from 1.2 in 2010 to 1.5 in 2011. This indicates that the company now has lesser short-term assets to sell in order to crosscut up its immediate liabilities without selling off its inventories. The companys ability to pay off its worry expenses has also declined and it is indicated by the fall in the interest cover ratio from 9.6 multiplication in 2010 to 4.34 times in 2011. This is due to the shortage of funds which has been blocked by the debtors, increasing bad debts, bank overdraft balance etc. The gearing ratio describes the level of the companys capital being funded by the owners money versus the money of creditors. Here, it has declined by 3% as the creditors collection period has also slightly decreased. This means that the company is paying off its creditors earlier than it used to do in the previous year. This results in lesser handiness to creditors funds and more reliability of the business on the owners equity. The earnings per share of the company declined from 0.63 in 2010 to 0.29 in 2011. A decline in EPS is the result of a decline in the profitability of the company. EPS measures the allocation of companys profit to each of its outstanding shares. Since profit has declined, the allocation to each share also declined and then the EPS. The operating cash flow per share of the company increased from 1.2 in 2010 to 1.5 in 2011