Generally Accepted Accounting Principles Essay

Although dropping slightly the second year they have managed to improve this in their third year increasing their overall profit king preventative Styles has withal increased some(prenominal) its Return on Assets and Return on Equity, this demonstrates the ability of the company to efficiently make use of its assets and equity which ultimately reduces requirements for more than funding and reduces cost making better use of what they soon have. capability prophylactic Styles Pty Ltd appears on average over the last three long time to be improving its efficiency to make better use of their assets and crook over their inventory.Safety should also focus on this ara and progress to to improve their efficiency. Whilst the values whitethorn seem quiet higher their hail sales amount has raised which may not be interpreted into account with averages. Safety Styles may need to revisit their inventory schema as their turn over period is quite high this would be a benefit for them in the long term by having faster access to cash for beautifyment in other assets. They should also deliver attention to their Accounts Receivable Turnover and aim to reduce this. LiquidityWhilst Safety Styles Current symmetry and Quick asset ratio is declined they are both still very healthy numbers. Safety Styles non-current assets have been increasing annually. They may want to pay attention to reducing their inventory levels and accounts receivable to buy the farm them more cash and the opportunity to invest into non-current assets or reduce their liabilities as they currently has a low level of cash compared to inventory and accounts receivable. This go awaying make the company more liquid in the short term.Safety Styles also has a very healthy quick asset ratio compared to the industry standard of 2. It should be noted that Safety Styles currently do not have a high level of liabilities and seem to be maintaining their levels of dent in relation to their assets Capital Str ucture Safety Styles currently have a very low gearing ratio and are using retained earnings for most of their financing. External sources of financing will be a benefit to Safety Styles to help them grow and invest in additional non-current assets.