Using Accounting Information
for Decision-Making
The actual manipulation of the statement of financial
position is indeed a necessity for the visualization of the
company’s account. Consequently,
the building interests in calculating the percentage distribution and analysis
of ratio of the company’s account will be undergone in this study. The
financial statement as a common tool to the businessmen in the market place
will be employed.
Majority of businessmen
are knowledgeable in the ups and down of the cash flows in the market field. Sudden
changes in total assets, total liabilities and stockholders’ equity on a place
where the buying and selling of securities are conducted, makes remarkable signs
for them. These variables as accounting terms are, are within the basic
accounting equation which when computed will lead the DNA bank recommendation
in allowing Terri(Abajab Pty Ltd) for the loan amount of $ 125,000.
Summary
of findings, the total liabilities of Abajab Pty Ltd had reached a total figure of about 38 at December 31, 2007. Total stockholders’
equity for the company had reached a total figure of about 137 at the same time. This yields 175 as an amount of total assets for the corporation at December
31, 2007.
In
December 31, 2006, the total liabilities of Abajab
Pty Ltd had reached a total figure of about 40. Total stockholders’ equity for the company had reached a total
figure of about 139 at the same
time. This yields 179 as an amount
of total assets for the corporation at December 31, 2006.
And
in December 31, 2005, the total liabilities of Abajab
Pty Ltd had reached a total figure of about 36. Total stockholders’ equity for the company had reached a total
figure of about 154 at the same time.
This yields 190 as an amount of
total assets for the corporation at December 31, 2005.
Income Statement
The
Abajab Pty Ltd in 2005 has a Net Sales of 492 less the Cost of Sale of 405 is 537. Then the 537 less
the
operating expenses of 495 is 42. Then the 42 less the Income Tax expense of 13. Then the final result of the operating Profit after tax had
reached a total figure of about 29.
The
Abajab Pty Ltd in 2006 has a Net Sales of 986 less the Cost of Sale of 404 is 582. Then the 582 less
the operating expenses of 508 is 74. Then the 74 less the Income Tax expense of 23. Then the final result of the operating Profit after tax had
reached a total figure of about 51.
The
Abajab Pty Ltd in 2007 has a Net Sales of 1,048 less the Cost of Sale of 408 is 640. Then the 640 less
the operating expenses of 520 is 120. Then the 120 less the Income Tax expense of 36. Then the final result of the operating Profit after tax had
reached a total figure of about 84.
In
terms of the Operating Profit After Tax, the Abajab
Pty Ltd had reached a total figure of about $84, which yields a percentage of 62.22 in 2007 and 37.78 in 2006. This had an approximate difference of
24.44 %. While in 2005 to 2006, the
Operating Profit After Tax, had reached a total figure of about $51, which yields a percentage of 63.75 in 2006 and 36.24 in 2005. This had an approximate difference of 27.50 %. It is notable that the
difference between 2005 and 2007 is very far. The 2005 Operating Profit After
Tax of the Abajab Pty Ltd had reached a total
figure of about $29, which yields a
percentage of 25.66 while in 2007 the
Operating Profit After Tax of the Abajab Pty Ltd
had reached a total figure of about $84,
which yields a percentage of 74.34. This
had an approximate difference of 48.68 %
or $55 cash on hand. This implies that Terri’s restaurant has increasing
cash on hand. This means that she is highly recommend for load amount because
she can pay us.
To
evaluate the company’s financial strength and future solvency, we calculated the
Current Ratio Debt to Total Assets of Abajab Pty Ltd.
It is been found out that this company has big working capital ratio
specifically year 2005 which yield 5.38
but they declined from a total figure of about 3.80 in year 2006 and 3.78
in year 2007. This current Ratio proved that this company has a greater short
term solvency.
The
debt to total assets of Abajab Pty Ltd had
reached a total figure of about 21.71%
in year 2007, 22.35% in 2006 and 18.95% in year 2005. It is been notable
that there is a decrease in percentage which greatly implies that this company
plays the market smoothly and a buffer before the insolvency happen to this
firm.