Question

Find an income statement or balance sheet for a business. Review the accounting concepts and the income statement or balance sheet to answer the following questions: 1. How is the business performing based upon your review? Is the business growing or declining, why? 2. Where is the business focusing the majority of its resources? 3. What advice would you offer to the owner or leadership of the business?

Answer 1

On reviewing the balance sheet and profit and loss

1) The company is performing very successfully as the growth of profit is increasing year by year and majorly sales of the company are increasing in percentage more than the % acheived in previous years which enables the compan's long term growth and sales to cost ratio is also increasing which shows that company is running on cost effective basis. It can also be understood that the investments made in the previous years acheiving the results in current years with minimum operating cost.

2. As comparing the ratios and figures, the comapny is mainly focusing on expansion of business around different segments and areas which helps them to acheive sustained earnings and increasing brand value for their produts.

3. On my understanding, the company is investing more in the areas where there is huge competition and regulations. Better to enter in areas where there is less competition though the profit margin is less. By doing this the comapny create demand in that industry as the comapny has sufficient funds.