Techniques for Business Decisions Making

Techniques for Business Decisions Making

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Title : Techniques for Business Decisions Making

September 6 , 2008

Course Work

Techniques for Business Decisions Making

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Question 1 Trial balance For the Year Ended Particulars DR CR

Capital 75 ,000

Cash 45 ,100

Bank 39 ,350

Sales 378 ,000

Purchases 265 ,000

Debtors 234 ,000

Creditors 196 ,000

Return Outwards 8 ,000

Return Inwards 14 ,000

Vehicle Account 10 ,000

Insurance 1 ,400

Electricity Bills 150

Wages 43 ,000 p

Rent 5 ,000 Techniques for Business Decisions Making

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Question 2 Profit and Loss Account For the Year Ended 30 September 2005 Particulars

Sales 204 ,300

Less : Cost of Goods Sold Opening Stock

46 ,000

Add : Purchases

80 ,000 126 ,000

Less : Closing Stock (7 ,000 (119 ,000

Gross Profit

85 ,300

Loan Interest (7 ,000

Miscellaneous Expenses (37700- 500 (37 ,200

Provision for bad and Doubtful Debts (2 ,063

Rates (10250-250 (10 ,000

Insurance (2 ,050

Bad Debts (8 ,000

Depreciation (4 ,400

Net Profit 14 ,588 Techniques for Business Decisions Making

4 Balance Sheet As at 30 September 2005

Fixed Assets

Office Equipment

44 ,000

Less : Accumulated Depreciation (26 ,800 ) 17 ,200

Current Assets Stock 7 ,000

Debtors 79 ,188

Prepaid Expenses

250

Cash 450 86 ,888

Current Liabilities Trade Creditors

48 ,000

Accrued Expense

500

Bank 2 ,000 50 ,500

Working Capital

36 ,388

Capital Employed

53 ,588

Capital 20 ,500

Net Profit

14 ,088 34 ,588

Long Term Loan

35 ,000 69 ,588

Drawings (16 ,000

53 ,588 Techniques for Business Decisions Making

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Question 3

Viability of a company can be determined by looking at the overall picture of the organization . In this case , Swanage Railway Company 's position can be looked in depth through various ratio analyses to be able to conclude objectively on the capabilities of the company . Ratio analysis is a tool that is used to compare , perform evaluation and comparing the performance with the past , competitors , industry average and use it as a benchmark (our industry evaluation ) for not just internal appraisal but as a means to improve performance collectively The results from ratio analysis are given as a relative measure that is in percentage form however certain problems limit the extent of which ratio analysis can be used as a basis for concluding the viability of the company . For example inflation is an issue which effects each year and by just looking at the financial statements , the element of inflation is ignored , different accounting policies are followed by industries , the nature and sizes of competitors differ and most importantly financial statements are based on accounting policies which are prune to window dressing

Having identified the limitations of the analysis being carried out , the examination of SWANAGE RAILWAY CO .LTD is broken down into a number of categories as follows

Profitability and Return Ratio

The overall turnover has increased by 8 .07 from last year , in which Passenger taking has increased by 8 .68 and Catering income by 5 .06...