Financial Performance of Pace Leisurewear Ltd Case Study

Financial Performance of cubic yard Leisurewear Ltd - Case Study ExampleFinancial statement analysis involves, comparing the performance with that of other firms in the same industry and evaluating trends in the firms financial position over time. These studies help management identify deficiencies and accordingly take actions to improve performance.For evaluating the financial performance of the firm ratio analysis and Du Pont system argon used. check to Fraser, L. (2001) & Ormiston, A. (2001) the subordinate classifications of ratio analysis areAccording to Fraser, L. (2001) & Ormiston, A. (2001) The available cash resources to satisfy the menstruum obligations moldiness come primarily from cash or the conference to cash from of other current asset. For interpreting the liquidness of the firm, several types of ratios have been depicted. Current ratio, quick ratio, cash flow liquidness measures the firms short-term solvency. Firms ability to acquire the current obligations c an be judged. Liquidity position or effects of using debt can be evaluated. The available cash resources to satisfy the current obligations must come primarily from cash or the conversation to cash from of other current asset. To judge the long-term financial position of the firm, financial leverage ratios are used. Brigham, E. (2007) & Houston, J. (2007) mentioned that these ratios indicate mix of funds provided by owner and lender. According to Fraser, L. (2001) & Ormiston, A. (2001) the amount and proportion of debt in a companys capital structure is extremely important because of the trade off between risk and return. Gross realise margin, operating profit margin, and net profit margin represent the firms ability to translate sales dollars into acquire as different stages of measurement. Administrative efficiency can be judged through this. Brigham, E. (2007) & Houston, J. (2007) assessed the fixed asset disturbance ratio measures how effectively the firm uses its fixed asset s and total asset turnover measures the turnover of the entire firms asset. So, Debt ratio, debt to uprightness ratio, long tem debt to total capitalization ratio have been drawn.Ratio AnalysisLiquidity Ratio short-run SolvencyYear before lastLast yearCurrent1.761.13Quick1.100.47Cash flow liquidity0.30The current ratio of the firm indicates that at the end of year current asset covered current liabilities 1.13