Project #38883 - accounting

 

I am only looking for a credit or high pass grade! will consider any resonable price offer.

 

 

Instructions and information

1. This assignment must be completed either individually or in teams of 2 students. 

2. This assignment contributes 20% to the final mark in this unit of study. 

3. Only one submission is required per group. 

4. The assignment must be accompanied by an assignment cover sheet. Make sure all 

name/s and student id/s are on the assignment cover sheet. You are not required to 

submit the assignment questions. The assignment cover sheet can be downloaded from 

the assignment folder of the unit home page in Black board.

5. The assignment must be prepared using MS Word. You should include your name/s and 

student id/s as a footer on each page of the assignment. 

6. Assignments should be submitted via the electronic submission box. (refer to instructions 

in the assignment folder).

7. Students should make themselves aware of the Extensions Policy and Late Penalties 

Policy, which can be found in the ACC10007 Financial Information for Decision Making 

Unit Outline.

8. Students should ensure that they keep a hard copy and an electronic copy of their 

assignment.Page 2 of 6

Premium Electronics Pty Ltd is a wholesale business established in 2000 by a group of 

friends with a mix of business and marketing skills. The company supplies electronic 

components to the computer and related industries. In its early years Premium Electronics 

Pty Ltd achieved growth levels sufficient to satisfy the financial needs of the owners through 

high dividend payout levels which continued until 2009.

During 2010 and 2011 the industry experienced such q period of expansion that Premium 

Electronics Pty Ltd.’s competitors began to expand their operations to take advantage of the 

buoyant conditions. Three other firms also entered the market for the first time.

In an attempt to ‘beat off the opposition’ the directors of Premium Electronics Pty Ltd reacted 

by expanding their advertising campaign and reducing the selling price across their full range 

of products. These two actions had apparently beneficial effect of maintaining Premium 

Electronics Pty Ltd market share in an expanding market. Premium Electronics Pty Ltd had 

increased their warehousing and delivery capacities to cater for this expanded market.

The directors (owners) of Premium Electronics Pty Ltd rely heavily of the profitable 

operations of the company for their regular dividend income. Historically, little of the profit 

has been retained in the company.

You have been appointed by the directors of Premium Electronics Pty Ltd to reassure them 

that the financial performance of the company over the 2010 to 2013 period was, as they 

believed, satisfactory.

Relevant financial data is attached.Page 3 of 6

Premium Electronics Pty Ltd

Comparative Income Statements

For the years ended 30 June: ($000’s)

2010 2011 2012 2013

Sales (all credit) 4,200 4,950 5,460 5,950

Less: Cost of Goods Sold

 Inventory, beginning 300 320 380 480

 Purchases 1,420 1,760 2,100 2,380

 1,720 2,080 2,480 2,860

 Inventory, end 320 380 480 560

Total Cost of Goods Sold 1,400 1,700 2,000 2,300

Gross Profit 2,800 3,250 3,460 3,650

Less: operating expenses 

Selling expenses 1,185 1,485 1,750 1,960

Administration expenses 1,100 1,200 1,150 1,150

Interest expense 77 130 170 228

Total expenses 2,362 2,815 3,070 3,338

Net Profit before Tax 438 435 390 312

Less: Tax 140 150 140 120

Net Profit after Tax 298 285 250 192

Dividend paid 300 290 250 190

Premium Electronics Pty Ltd

Comparative Statements of Financial Position

As at 30 June: ($000’s)

2010 2011 2012 2013

Current assets

Cash at bank 50 20 30 0

Accounts Receivable 525 620 600 620

Inventory 320 380 480 560

Total current assets 895 1,020 1,110 1,180

Non-current assets 1,700 1,950 2,090 2,400

Less: Accumulated depreciation 550 650 770 900

Total non-current assets 1,150 1,300 1,320 1,500

Total assets 2,045 2,320 2,430 2,680

Current liabilities

Bank overdraft 75 115 170 263

Accounts payable 150 205 250 300

Other current liabilities 50 50 60 60

Total current liabilities 275 370 480 623

Non-current liabilities 650 835 835 940

Total liabilities 925 1,205 1,315 1,563

Shareholders’ Funds

Share capital 1,107 1,107 1,107 1,107

Retained earnings 13 8 8 10

Total shareholders’ funds 1,120 1,115 1,115 1,117

Total liabilities & Shareholders’ funds 2,045 2,320 2,430 2,680Page 4 of 6

Premium Electronics Pty Ltd

Statements of Cash Flows 

For the years ended 30 June: (($000s)

2011 2012 2013

Cash flows from operating activities

Cash inflow from trading 4,855 5,480 5,930

Cash outflow from trading -4,290 -4,735 -5,310

Cash payments for interest and tax -280 -310 -348

Net cash inflow from trading activities 285 435 272

Cash flows from investing activities

New capital expenditure -250 -140 -310

Net cash outflow from investing activities -250 -140 -310

Cash flow from financing activities

Cash inflow from borrowing 185 105

Dividends paid -290 -250 -190

Net cash outflow from financing activities -105 -250 -85

Net change in cash position -70 -45 -123

Cash at bank, beginning -25 -95 -140

Cash at bank, end -95 -140 -263

-70 -45 -123

Premium Electronics Pty Ltd

Ratios

2010 2011 2012 2013

Profitability

Return on assets (%) 25.18 25.88

Asset turnover (times) 2.05 2.27

Gross profit margin (%) 66.67 65.66

Net profit margin (%) 12.26 11.41

Return on equity (5) 26.51 25.50

Efficiency

Accounts receivable turnover (days) 44.63 41.66

Inventory turnover (days) 80.80 75.14

Accounts payable turnover (days) 38.55 42.51

Liquidity

Current ratio (times) 3.25 2.76

Quick ratio/acid test (times) 2.09 1.73

Financial gearing

Interest coverage ratio (times) 6.68 4.35

Gearing ratio (%) 36.72 42.82Page 5 of 6

Required:

A. Calculate all of the following ratios for the years 2012 and 2013 and record these in the 

ratio table above. Calculations must be shown separately in and appendix at the end of 

the report. 

Profitability:

• Return on assets

• Asset turnover (times)

• Gross profit margin

• Net profit margin

• Return on equity

Efficiency:

• Accounts receivable turnover (days)

• Inventory turnover (days)

• Accounts payable turnover (days)

Liquidity:

• Current ratio

• Quick asset ratio

Financial gearing:

• Interest cover ratio

• Gearing ratio

. (30 marks)

B. Write a report including the following:

• analysing the profitability, efficiency, liquidity and financial stability of the business 

from the years ending 30 June 2010 to 30 June 2013, explaining reasons for the 

changes.

• Identify the existing and potential problems for Premium Electronics Pty Ltd

• Recommend action required, if any, to overcome identified problems

 (60 marks)

C. Presentation (10 marks)

(30 + 60 + 10 =100 marks)Page 6 of 6

Assessment Criteria

1. Format and layout

• Assignments to be submitted as a single word document

• Name/s and student/s included as a footer on each page

• Reports to be a maximum of 1,800 words which includes an introduction summary, 

body of the report (give this a title), any tables, summary of findings and bibliography 

and should be of appropriate standard to submit to the management and contain 

appropriate content to meets the needs of the company. 

• Single spaced

• Main headings in bold type

• Clarity of expression, correct grammar and correct spelling will form part of the 

assessment.

2. Ratio calculations

• Ratios correctly calculated for years ending 30 June 2012 and 2013

• Must be calculated to 2 decimal places

• Show how each ratio is calculated e.g. Accounts Payable turnover (days) = (average 

Accounts Payable/credit purchases) x 365

• Ratio calculations and formulae are to be included in a separate section at the end of 

the report.

• Use average figures where required, not year-end figures e.g. Accounts Payable 

turnover (days) 2013: (average accounts payable/credit purchases) x 365: 

(((accounts payable balance at beginning year + accounts payable balance at year 

end)/2)/credit purchases) x 365 

3. Discussion

• You should write a sentence or two explaining what each ratio means. Use your own 

words, not just a copied sentence from the text.

• Your discussion should include the following:

o An analysis of the profitability, efficiency, liquidity and financial stability of the 

business from the years ending 30 June 2010 to 30 June 2013, explaining 

reasons for the changes.

o Identification of any existing and potential problems for Premium Electronics 

Pty Ltd

o Recommendation of action if any, to overcome the identified problems

Note: Assignment 2 must be submitted as a single “Word” document with a maximum word 

count of 1,800 words.

Check the Blackboard Announcements and your student email daily in the period 

immediately after you have submitted your assignment. Sometimes there is an error 

submitting the assignment and we need you to resubmit your assignment. 

Please read the assessment criteria (shown above) carefully prior to submitting your assignment

Subject Mathematics
Due By (Pacific Time) 09/07/2014 12:00 am
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