Accounting & Finance Presentation 1 AUSMAT

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 
bad.

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!!.

test attribution text

Add Comment