An Accounting Joke Three accountants are sitting in a sauna. Suddenly there is a beeping sound. The first accountant presses his forearm and the beeping stops. The others look at him curiously. "That's my pager," he says, "I have a micro-chip under the skin of my arm.“ A few minutes later a phone rings. The second accountant lifts his palm to his ear. When he finishes he explains, "That's my mobile phone. I have a micro-chip in my hand."
An Accounting Joke The third accountant, feeling decidedly low- tech, steps out of the sauna. In a few minutes he returns with a piece of toilet paper hanging from the crack of his butt. The others raise their eyebrows. "Oh, excuse me he says. I'm getting a Fax."
The Demo Company is a manufacturing company based in Sydney. The company has experienced cash flow and profitability problems in the past few years. The Directors wish to improve its cash flow and profitability.
The company’s current cash flow is negative $365,073 with a profitability rate of 11.64%.
How can the cash flow and profitability position be improved?
The Demo Company’s short and long term debt position is currently $1,484,073 with a cash after operations amount of $90,954 . The company is very concerned with this level of debt and wishes to decrease borrowed funds to $1,000,000.
How can the decrease in borrowed funds be achieved and what will the decrease impact upon?
To get a R eturn O n C apital E mployed Or ROCE Why go into business?
X Components of ROCE Measures Balance Sheet Management Revenue Net Operating Assets EBIT Revenue Measures Profit and Loss Management
The Demo Company wishes to implement a budget based on drivers of 70% in cost of goods sold, 100 days in receivables, 95 days in inventory with an increase of 10% revenue growth and a 5% price increase for the next financial year. The impact of this change must be reflected the the profit and loss statement and balance sheet.
A Practical Loan Scenario Bank Reports Provided Numerous interpretive phone calls Paper based application submitted Client calls Bank to arrange loan Conditional Loan approved Accountant provides financial documentation