Analysis of the Operation and Financial Condition of the Enterprise

Analysis of the Operation and Financial Condition of the Enterprise3. Replenishment of cash from inner resources was performed mainly based on thedepreciation deductions – it was impossible to use the annually decreasing profitfor this purpose.4. The total amount of investment in fixed assets for two years – Ls 568 thous. (326thous. + 242 thous.) is almost equal to the amount of deductions for depreciation -Ls 562 thous. for this period (Ls 256 thous. + Ls 306 thous.). Such an outcomeillustrates that the investments in this area are practically not increasing and givesrise to a question – whether the company policy in the area of investment is stillremaining competitive.5. The company is neither attempting to increase its share capital nor raise any longtermloans, even in spite of the fact that net investment in fixed assets reached anamount of Ls 568 thous. over the last 2 years. Thus a pressure on cash was exertedthat is necessary for the working capital needs and the bank loan reached theamount of Ls 714 thous. as a result.Test your knowledge:1) Describe the financial analysis ratios according to the following characteristics: economic potential of the enterprise; business operations of the enterprise; operating efficiency of the enterprise; the financial status and solvency; competitiveness of the enterprise.2) Name the factors affecting gross profit of an enterprise.3) Describe the meaning of a primary ratio. What are net assets? Why in the analysis ofreturn from business operations of an enterprise net assets are used?4) What ratio is called the ‘Acid test ratio’?5) Describe the investment ratios.6) How would the increase in the number of shares influence the ‘Earnings per share’ratio?7) Make the performance analysis of your enterprise according to the example providedunder ‘Interpretation of Company M data’.90