Financial analysis

Question 1

How can an increase in fixed assets be
analysed?

Answer 1

An increase in fixed assets is referred to as a capital investment programme.

Questions should be raised about how it was financed - Was it borrowing?, retained earnings? etc

Question 2

How can an increase/decrease in current assets be analysed?

Answer 2

The percentage increase/decrease must in the current asset must be found between time period.

This figure must then be compared to another related figure to find out whether the increase/decrease was justified.

For example, their’s a percentage increase in stock but a percentage decrease in sales.

Question 3

What is stock control?

Answer 3

Managing stock levels in a cost-efficient manner.

Question 4

What can a decrease in the number of stock turnovers per year indicate?

Answer 4

It can indicate poor stock control.