Hello, this presentation will be about
the financial performance of Shoe Dash Ltd This is our income statement and as
you can see our profit is $18250. This is our financial position and it
shows our assets, liabilities and equity. The year ended 30th November 2020, our net
profit margin is 39.33% and our current ratio is 6.56:1. As for Shoe Dash's financial
performance, our net profit margin is 39.33%. As a whole, a net profit margin of approximately
10% will be considered average and a net profit margin of over 20% will be considered good
but of course, companies of different sizes and industries have different expectations.
So, for Shoe Dash, a Private Limited Company, a 39.33% net profit from sales is considered
a good amount and is shows that the business is doing quite well in terms of profitability
even though it just started operating for a year especially during a pandemic right now.
An expense to sales ratio of 6% of net sales also proves that Shoe Dash Ltd
manages its expenses effectively. However, a current ratio of 6:56:1 is
It is true that a higher current ratio shows that the business is able to pay
its day to day expenses and short term debts. But, a current ratio which is too high (usually
above 2.5:1) shows that the business has too much current assets over current liabilities.
It’s not utilising its assets efficiently for further investments or to buy more
stocks or to maximise growth and profit. The net profit margin may be high due to the low
expenses and increased sales revenue of the shoes followed by a low percentage of
the cost of sales and inventory. Liquidity ratio may be too high because Shoe
Dash wants to retain assets for debt repayment or emergencies like COVID pandemic or
new policies imposed like the CMCO. We can improve our marketing strategies to
increase brand awareness by advertising on more social media sites or television or by
implementing loyalty programmes to improve customer loyalty; and increase sales revenue.
We can reduce the current ratio by increasing short term loans instead of applying for
long term loans like the current bank loan of $100000 so that liabilities will decrease in
the future and the company’s burden will ease. The internal users which are managers use the
financial reports of our company to make important decisions such as whether to continue running this
business or not or whether to purchase certain assets or sell certain unwanted assets.
It can also be used by managers to track business performances or come up with budgets.
External Users such as potential investors use the financial reports to assess the viability
of investing in Shoe Dash.
They use it to consider questions such as, “Will I be
able to earn high returns?” For example, if the income statement shows low or fluctuating
profits, it indicates higher risk for investment. Thank you for watching!!.