Analysis of Financial Statements of Bogus Limited For the Year-ended Essay

Analysis of Financial Statements of phony Limited For the Year-ended 30 June 2004-2005 - turn up ExampleThe firms inventory turnover also shows clear improvements in its efficiency. In terms of stability, although there is marked recovery in the leverage and liquidity ratios, Bogus Limiteds debt ratios imply that the firm is still highly leveraged and may possibly encounter liquidity problems in the future as a result of its financial positioning. given over these outcomes, a potential shareholder is recommended to invest in the company and take advantage of the firms bright earnings prospect. In light of the firms highly-leveraged position, a potential creditor is recommended to providentially extend credit line to Bogus Limited. Prior to arriving at an investment decision, potential shareholders and creditors must initially analyse the financial position and health of a particular company. This report provides an overview of the financial standing of Bogus Limited as at year-en d 30 June 2005. It intends to aid a potential shareholder in assessing the feasibility of investing in the companys stocks by reviewing the overall and per-share performance of the firm in the past two years. Moreover, this report aims to assist a potential creditor in evaluating the companys financial health by looking at the efficiency and stability of Bogus Limited as indicated by the liquidity, leverage and turnover ratios posted in the given period.Body of the ReportPerformanceBased on the income statement of Bogus Limited for year-end 2005 and 2004, the firms sales increased by 26% or $554.4 million, from $2,124.1 million to $2,678.5 million. This signals that the company has sustained its earnings growth from operations in the last two years. This assertion on the firms profitability is supported by the net profit margin posted that rose to 13% as at year-end 30 June 2005 from 11% in the previous year. Although the companys cost of goods sold good increased resulting in lowe r gross profit margin, Bogus Limited is