Internal analysis Essay Example | Topics and Well Written Essays - 1000 words

Internal analysis - Essay slipFinancial Resources and Analysis The financial resource of a confederacy is the money available to the company in the form of hard cash, cash equivalents, credit lines and liquid securities. An entrepreneur needs to have sufficient amount of cash to operate a vocation successfully. Analytical tools like dimension analysis de confinesine the profitability and business risks of the company. The management of the company needs to analyze the companys profitability, business risks and financial watch to regard a decision related with the company (Abacus, Management). The company had generated sales of $12 million in the financial year 2011. The current proportion signifies the companys ability to meet the miserable term obligations of the company and a current symmetry between 1.5 and 3.0 signifies that the company is in a healthy condition (Brigham, and Houston 87). The current ratio of ABS is 0.77 and 1.12 in the financial year 2011 and 2012 respe ctively. The companys ability to meet its short term liabilities was very poor in the year 2011, however the companys current ratio strengthened in the year 2012. ... The debt to impartiality ratio was negative in the financial year 2011 and amend considerably in the financial year 2012. The cash ratio of a company determines the ability of the company to repay its short term liabilities in a short time. The cash ratio of the company should be equal to or below 1.00. The cash ratio of ABS is 0.22 and 0.64 in the financial year 2011 and 2012 respectively. The cash ratio of the company is stronger in the year 2012 which signifies that the company has the ability to repay its current liabilities immediately by utilise cash or cash equivalents (Gibson 246). The inventory employee turnover ratio indicates the effective use of the companys inventory management practices (Andrew, and Gallagher 97). The inventory turnover ratio of the company is 17.16 a high inventory turnover ratio is unhealthy because they represent an investment with a rate of zero. The return of the shareholders equity indicates the profitability to the shareholders of the company after including the tax and other expenses. The return on equity ratio in the year 2011 was negative which indicates that the shareholders did not receive any profit in the same year. This was mainly collectible to the fact that the hospitality effort was not performing well during recession. At the present situation, the hospitality industry is earning meagre profits because the economy is recovering from recession. The return on equity ratio was 5.06 percent in the year 2012 which signifies that the company is yielding profits and may provide better returns to the shareholders in the future. The current ratio of the company has been rising and the acid test ratio is weak. A strong current ratio conjugated with a