Financial Statement Analysis Report Assignment Example | Topics and Well Written Essays - 1000 words

Financial Statement Analysis Report - Assignment Example The preparation of financial statement analysis requires financial ratios, accounting data from financial statements. The ratio assists in measuring strengths and weaknesses of the firm and allows trends and comparisons with other firms within the industry to be identified. It also covers the areas of liquidity, operating profits, financing and stockholders' return on investments (Collier, Grai, Haslitt, McGowan, 2004). In the condition given, Track Events Ltd. is owned by a local independent ticket agent who sells tickets for sporting events, and that is why he needs to analyse his financial accounts in order to determine boost in sales and to make sure that his business is not suffering from insolvency. Total revenue from commissions and profitability has varied widely over the last year. Revenue from commissions peaked over ?1,073,000 in 2010 and dropped to ?1,053,000 in 2011. This may be due to decrease in the demand for the tickets being sold. Assessing the profitability of Trac k Events Ltd. is very significant in order to determine future business plans. These profitability ratios indicate the increase in the profitability of current operations of the business. Operating profit margin helps to provide useful information for investors when examining the trend for determination of the company’s quality. It has risen from 9% in 2010 to 28% in 2011. This shows that the company’s management has succeeded in generating income from the business operations. This increase is due to revenues from commissions increasing faster than the expenses of the business. Furthermore, the net profit margin which shows the earning capacity of business has gradually increased over the year from 5% to 29%. This is a clear indication of the company being considered as more stable and profitable, after payment of all taxes and expenses. Possible reasons of this are the reduction in operating expenses and increase in sales. Return on Total Assets is a measure of net pr ofit earned against the use of total assets. It has increased considerably from 2% to 14% over the year. This means that Track Events Ltd. is able to make use of its assets efficiently thereby increasing its profits. Decrease in the staff costs as a percentage of commissions earned from 62.5% to 48.7% informs that the company is able to keep more fraction of the commission after paying its staff costs as less staff costs per pound of commission earned is being paid. This drastic fall in salaries may either be due to reduction in salaries or laying off workers thereby increased productivity and reduced costs. Besides this, the evaluation in 2011 relative to the previous year concludes that the liquidity has increased, with the current ratio increasing over the year. This indicates that the position of the firm has improved and the firm is liquid enough to repay its debts. This significant increase may have been due to the increase in current assets by conversion of non-current assets into current assets, by borrowing or ploughing back profits. In addition, the decrease in current liabilities by paying off debts may also have caused this increase. The interest coverage of Track Events Ltd. has increased from 4% to 10%. This notifies that the debt burden of the company is lower and bankruptcy or default is less likely to be possible. This is due to the fact that this year Track Events made huge profits due to a radical increase in its incomes and a reduction in its expenses. Moreover, the

Volcanic Smog in Hawaii Essay Example | Topics and Well Written Essays - 1250 words

Volcanic Smog in Hawaii - Essay Example The volcanic smog created by Kilauea volcano is hazardous to the surrounding population as well as the whole island, economically, socially, environmentally, and physically. A volcanic smog results when sulfur dioxide mixes with different other gases, moisture, and sunlight in the atmosphere. Sulfur dioxide is produced, whether the volcanic activity was small or big. The effects of volcanic smog are greatly felt by those people living very close to the volcano. However, those living far away from the volcano are still affected, though in a lower measure. This is mainly because of the action of winds, which transfer the smog to different areas. In Hawaii, it is estimated that there has been approximately 50 volcanic eruptions in the twentieth Century only (Rado Web). Water in the area is greatly affected by the volcanic smog. First, there is the formation of acidic rain when sulfur dioxide in the gases emitted reacts with Oxygen in the air. The acid rain is lethal to plants, animals, and human beings. This therefore leads to other major effects. People in Hawaii Island mainly depended on rooftop rainwater for drinking and domestic and farm use. Therefore, when the volcanic smog results in acidic rain, this means the people cannot benefit from this water, as it is not safe for any use. This water cannot be drunk as it is contaminated. Therefore, they have to look for alternative sources of water for domestic use. Similarly, the acidic rain is not good for plants and other organisms. Most people in Hawaii Island practise farming as their main source of income. They plant different crops including flowers in plantations. When acidic rain occurs, the crops in plantations are destroyed, and this has forced most farmers living around Kilauea Volcano to abandon farming and look for alternative means of survival (â€Å"NCBCNEWS† Web). The sulfur dioxide in the volcanic smog has had disastrous effects on one Kau district. Many farms and nurseries have been destroy ed, in addition to putting at risk flower and vegetable farms and other crops such as tomatoes, lettuce, medical marijuana, as well as sunflower, and roses. The Hawaii government, because of the economic depression has not been able to compensate farmers for the losses, forcing most farmers to relocate. This has therefore disrupted the economic and social set-up of people, including farmers, as some have been compelled to move out of Hawaii in search of different jobs (â€Å"NCBCNEWS† Web). Apart from the economic effects, volcanic smog also affects the health of people. The volcanic smog comprises a variety of dangerous gases, and small particles and droplets that have high levels of acidity. All these can be inhaled by people, to rest in the lungs. This affects the mucus membrane and lungs, as well as lung function. This is in addition to the worsening of lung conditions such as asthma, and bronchitis, among others (â€Å"MedlinePlus.† Web). In 1997, the National Ins titute of Environmental Health Sciences (NIEHS) noted that respiratory problems due to sulfur vapors mostly affect young children (Rado Web).This is because their lungs are still developing and so might have long-term effects on the children. This puts at the risk the future population of Hawaii Island, as these children are the future of the society. Collaborating with the Hawaii Department of Health, the NIEHS conducted a health research in Hawaii to establish the relationship between volcanic smog and