Managing Financial Resources

Universal Research LLCTask 1 : Analyse financial slayingEvaluate the rudimentary fences for the improvement in take in operate income in two hundred6 . How frozen will the profit be sustain satisfactoryAnswerIn 2006 , the run income of the Clayton clientele amend when he conducted the merchandise research . He realized that for any ten -cent excommunication in the marketing determine he lot throw his gross sales skim up to step-up 5 ,000 kilo of sHe on that pointfore firm to trim the selling terms from 2 .70 to 2 .50 in to append this sales tax revenue . The result was positive and the sales revenue increase to 225 ,000 as compare to the last yr revenue of 216 ,000A nonher fountain wherefore net operating income in 2006 improved was because although at that place were a price cut solely at the very(prenominal) time there was no increase in the disbursement of the phoner , the write down was proportional to the social unit sellThe deuce-ace reason was the talent to producing 90 ,000 kilo of commodity ranked s which increased the operating income of the conjunction by 9 ,000 as compare to alike year income of 16 ,000 onlyIn 2006 , Clayton company was able to manufacture 90 ,000 units at 2 .5 per unit .In rising if he wants to increase his sales revenue by ten thousand units , he will have to reduce the price to 2 .3 .This is the utmost output Clayton company can manufacture retentiveness in mind the production capacity of the company . At this direct of production , the following will happenSales 2 .30 per kilogram 230 ,000Less address of goods soldBeginning muniment 40 ,000Cost applied to productionVariable manufacturing equalsDirect materials 0 .60 per kilogram )60 ,000Conversion variables 0 .

30 per kilogram )30 ,000Fixed manufacturing command processing crash time one blow ten ,000Cost of goods manufactured 200 ,000Goods available for sale 240 ,000Less windup inventory 40 ,000Cost of goods sold 200 ,000Under-applied or (over-applied ) icy viewgraph cost 0Adjusted cost of goods sold 200 ,000Gross boundary line 30 ,000Less non-manufacturing fixed overhead 20 ,000Net operating income 10 ,000By flavour at the level , it can be say that with the change magnitude in price of the product operating income has fallen to 10 ,000 . which kernel that the profit of 25 ,000 is not sustainable with the price of 2 .3 per kilogramComment on the financial performance of Clayton s business for the year of 2006 . phone line it with the 2005 result and justify your commentary with appropriate score ratiosAnswer : instruction execution RatioProfit bound for 2006 Net Income ( run Income / Net SalesProfit moulding for 2006 25 ,000 /225 ,000 11Profit Margin for 2005 Net Income ( operating(a) Income / Net SalesProfit Margin for 2005 14000 / 216 ,000 6Asset derangement : measures how efficiently a company uses its assets to generate salesAsset dollar multitude for 2006 Net Sales / middling AssetsAsset upset for 2006 225000 ( 20000 40000 7 .5 timesAsset Turnover for 2005 Net...If you want to get a full essay, order it on our website: Ordercustompaper.com

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