Case Study Of PESTLE Analysis

Question 1
Financial statements: are a structured to represent the financial position and financial performance of an entity inside the orgnaization . The main objective of financial statements is to providing information about the financial position, financial performance and the cash flows of an entity that is useful to a big wide range of users in making economic decisions. Financial statements also show the results of the management’s stewardship of the resources entrusted to it. To meet this objective, financial statements provide information about an entity’s: (a) Asset = 27,371 (b) Liabilities = 11,382 (c) Equity = 12,618 (d) Income and expenses, including gains and losses = 1,916 (e) Contributions by and distributions to owners

Question-- 2

The purpose of a ( PESTLE ) analysis is identifying various external political, economic, social, technological, legal and environmental factors that can affect a business. Managers then assess the risks that the identified factors pose and use that knowledge to inform decisions.

Question --3 Underlying assumptions
There are two assumptions for the preparation of financial statement
The accrual basis; and going concern
Accrual Basis
Under the accrual basis, the effects of transactions and other events are recognized when they occur, and not as cash is received or paid. Under the accruals basis, events are recorded in the accounting records and reported in the financial statements of the periods to which they relate.

Financial statements prepared on the accrual basis inform users not only to past transactions. when cash was paid or received but also of obligations to pay cash in the future and of cash or its equivalents to be received in the future. Going Concern

The going concern assumption is very important for the valuation of assets, as they may require valuation on a break-up basis if the company will cease trading

Question – 4

1- Liquidity Ratios
2- The current ratio measures a company’s ability to pay off its current liabilities (payable within one year) with its current assets such as cash, accounts receivable and inventories. The higher the ratio, the better the company’s liquidity position.
Current ratio = Current assets / Current liabilities = (6,155/4806 = 128).

Quick ratio = (Current assets – Inventories) / Current liabilities

Debt to equity = Total debt / Total equity (9,343/12,618= 74%)

This ratio indicates the degree of financial being used by the business and includes both short-term and long-term debt. A rising debt-to-equity ratio implies higher interest expenses, and beyond a certain point it may affect a company’s credit rating, making it more expensive to raise more debt.
Question –5
Profitability Ratios

Gross Profit Rate