Finaince for mangers Essay Example | Topics and Well Written Essays - 5000 words

Finaince for mangers - Essay Example They are considerably relevant and helpful to properly and fully assess the divisional financial and economic performance. After the critical evaluation, the relevant improvements are recommended accordingly. Quality Products Division The quality products division deals in furniture items made by hand and the raw natural materials are made part of it. Due to its quality products, this division has significantly contributed into the exports, especially in the Middle East. However, to critically understand the actual financial position of this division, the financial position and the audit comments are taken into account. Financial position 2007 2008 2009 Gearing (TL/TL+SC) 100% 53.98% 52.65% 52.32% Return on investment [PBIT / (TA – L)] x100% (Loss) 16.24% 18.96% Gross profit (gross profit/turnover) 100% 38.89% 40.43% 41.36% Profit before interest (profit before interest/turnover) 100% (loss) 5.70% 6.37% Profit after interest (PAI/Turnover)100% (Loss) 1.97% 3.34% Overseas Turno ver (overseas turnover/turnover) 100% 53.79% 44.51% 36.59% These are fundamental indicators of financial position of any corporate entity. ... Gross profit and profit before interest, profit after interest figures are slightly improving and on yearly basis, they provide 2 to 3% growth in these figures. With so much potential in the markets, local and foreign markets, this division’s gross profit and profit before tax are not increasing as they should be. In addition, this division has been more stable and in demand in the markets of Middle East, however, its recent decreasing overseas turnover highlights some of worrying signs for this division. This is negatively affecting the gross profit and profit before tax figures as well. Additionally, there are no positive audit comments for this division; the audit management letter clearly highlights that some quality control problems with a new range of adjustable chairs for senior citizens. As this industry considerably depends on the quality, such kind of quality control problems may reduce the number of customers. Additionally, the audit management letter points out tha t in every month 20 boxes of flat-packed chairs and desks are disappearing from the one of the division’s outlets. Improvements Profits can be improved by entering into the contract segment of the industry. This segment accounts for 29% of the entire furniture industry. For achieving that aim, the division is required to more concentrate on quality issues which are recently highlighted in the audit management letter. In addition, the disappearance of chairs and desks must be reduced by introducing some physical controls such as only authorized persons should be allowed to enter into the internal parts of the outlets and each incoming and outgoing shipment of desks