Business Report |
An Analysis of Business Performance of Galactic Marketing Agency |
Minti Spock, Galactic Marketing Agency |
This report provides the analysis and evaluation of the financial performance of Galactic Marketing Agency for October 2013. The information provided in this report will be based on the data presented in the two primary financial statements:
* balance sheet
* income statement
The results of data presented show that Galactic Marketing Agency is operating at a satisfactory level. In particular, the profit generated by the business for the month is very favorable, as is the changes in owner’s equity. ...view middle of the document...
A greater depth of evaluation of the business’s current situation and possible future performance can only be made by comparing the current financial statements with the past performance.
2.0 Financial Analysis
Accounting plays an important role in business management; it helps keep the business under control, and provides the owners with the financial information to make decisions in order to help the business grow.
In October 2013, Galactic Marketing Agency’s net profit was $12,673, which was favourable considering the 30% of fees revenue for the month is $10,815. In terms of increasing profit, one initial step the business should take is to increase revenues and decrease expenses.
Although the business is showing a healthy profit, it has limited cash flow. A closer inspection of the balance sheet shows that the business only has $133 cash on hand at the end of the month. However, the business has a high accounts receivable of $36,518 at the beginning of the month and this has increased slightly to $47,123 at the end of October. Given that the clients of the business are offered a 14 or 30 days credit, this outcome is considered as being unfavourable.
Furthermore, it can be seen clearly from the balance...