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1) Is budgeting used primarily for scorekeeping, attention, directing or problem solving? 2) How do. 1 answer below » 1) Is budgeting used primarily for scorekeeping, attention, directing or problem solving? 2) How do strategic planning, long range planning and budgeting differ? 3) Why is budgeted performance better than past performance as a basis for judging actual results? 4) What are the major benefits of budgeting? 5) Is budgeting an unnecessary burden for day to day problems? 6) Why is the sales forecast the starting point of budgeting? 7) How do spreadsheets aid the application of sensitivity analysis? Document Preview: View complete question » 1) Is budgeting used primarily for scorekeeping, attention, directing or problem solving? 2) How do strategic planning, long range planning and budgeting differ? 3) Why is budgeted performance better than past performance as a basis for judging actual results? 4) What are the major benefits of budgeting? 5) Is budgeting an unnecessary burden for day to day problems? 6) Why is the sales forecast the starting point of budgeting? 7) How do spreadsheets aid the application of sensitivity analysis? Document Preview: Assignment 2- Performance Evaluation
Years -2013 and 2014
Soule Company
Financial & Managerial Accounting
In 2014, the Current Ratio is decreasing from 1.66 to 1.5. This shows the company cannot easily make current debt payment.
The use of current ratio is to help creditors and investors to appreciate the liquidity of a company and to show that how simply the company will pay off its current liabilities. This ratio also expresses a firm’s current debt in reference to current assets. If a company has to vend of fixed assets to pay for its current liabilities, this generally means the company isn’t generating sufficient from its business to carry all activities. Further we can say the company is trailing money. At times this is an outcome of low collections of accounts receivable. The current ratio also shows overall debt load of the company. If a company is particularly down with a current debt, its cash flow will suffer.
The Inventory turnover is .6 in both the years that implies that it would approximately take 6 years to sell the entire inventory or complete one turn. That also means they don’t have very good inventory control.
This ratio is very important because total turnover directly depends on two vital factors of performance. The first factor is stock purchasing. If more quantity of inventory is purchased in one year, the company will have to trade more amounts of inventory to enhance its turnover. If the company can’t sell these inventories, it will incur storage costs and many other investment costs. This shows the company does not spend additional by buying very much inventory and wastes resources by keeping non-salable inventory. Also the company can efficiently trade the inventory it buys. This quantity also shows investors how much liquid a company’s inventory is. Inventory is one of the major assets a retailer use to report on its balance sheet. If this inventory can’t be traded, it is of no use to the company. This measurement also shows how… Attachments: Assignment-2-….xls Assignment-1…..docx View less » Jan 30 2016 02:02 AM
