A Report Of Pace Leisurewear Ltd Finance Essay

A Report Of Pace Leisurewear Ltd Finance Essay Pace Leisurewear Ltd is a manufacturer of casual wear and designer leisure clothes company. Jill Dempsey and Mike Greaves are two co-founder of Pace Leisurewear Ltd. Lots of fresh experience in similar business and new ideas for developing a new range of clothes for young people motivate Jill and Mike to form such business to attracts younger and higher income market. Under guidance of Jane Barker, who is experienced designer, company had taken lots of efforts and spend lots of money to recruit young and talented design team. As expected design team produced range of clothes and welcomed by enthusiasm buyers. With the help of marketing team lead by Jill Dempsey, the sales was growing and orders had reached their highest level ever. Recession period Pace Leisurewear Ltd started trading due to average sales. After economy coming out of recession, companys sales started growing with new exports markets in France and Switzerland. Jill and Mike were very delighted when they received a ord er from Arena, which could be very important for companies growth over next few years in leisurewear business. Jill  and Mike invested all their life time savings as well as taken out large mortgages on their houses to invest in companies business. Major contribution added by Keeble Estates Ltd, owned by Keeble brother, David and John Keeble. The board of directors of Pace Leisurewear Ltd are Jill Dempsey, Mike Geaves, Jane Berker, David Keeble and John Keeble. Difficulties faced by Pace Leisurewear Ltd. The main problem which is company facing is reduction in bank overdraft by half over next six months. Even draft accounts details received from the auditors shows profit has more than doubled. Surprisingly company facing cash situation is so poor. Company invested a lots on additional plant and after selling old machines company didnt manage additional expenses includes  £2.8 million for depreciation. It is already clear from Keeble brothers that addition investment is not possible. Board directors not have financial expertise and business had crossed the overdraft limit on several occasions. Because of poor cash situation company need large amount of money to successfully execute new order from Arena and override Pace Leisurewears liquidity problem. Financing ratio analysis in the tabular format with relevant formulas : Profitability ratio : Ratio Formulas Year( 2008) Year( 2009) Return on capital employed (ROCE) Profit before interest and tax x 100% Capital Employed 2100 x100% 10474 =20 % 4618 x100% 15600 =29.7% Return on Equity(ROE) Ratio Profit after tax x 100% Share holder equity Formulas 1248 x100% 6874 =18.1% Year( 2008) 2926 x100% 9000 =32.7% Year( 2009) Gross Profit Margin Gross Profit x100% Sales 6510 x100% 14006 =46.5% 10792 x 100% 22410 =48.15% Net Profit Margin Net Profit bf interest tax x 100% Sales 2100 x100% 14006 =14.99% 4618 x100 22410 =20.6% Efficiency Ratio : Ratio Formulas Year( 2008) Year (2009) Stock Turnover in days Stock held x365 Cost of sales 2418 x365 7496 =117.73 days 5820 x365 11618 =182.84 day Debtors Turnover in days Trade Debtors x365 sales 1614 x365 14006 =42 days 3744 x365 22410 =61days Creditors Turnover in days Trade creditor x365 Purchases 1214 x365 7496 =59days 2612 x365 11618 =82 days Liquidity Ratio : Ratio Formulas Year (2008) Year (2009) Current Ratio Current Assets = Current Liabilities 4356 2482 =1.8:1 9974 8844 =1.12:1 Quick (acid test) ratio Current assets Stock Current Liabilities 4356 2418 2482 =0.8:1 9974-5820 8844 =0.5:1 Gearing Ratio: Ratio Formulas Year (2008) Year (2009) Gearing Ratio Fixed Interest Capital x100% Fixed interest capital + equity 3600 x100% 10474 =34.4% 6600 x100% 15600 =42.3% Financing position and performance of Pace Leisurewear Ltd Profitability Ratio: Every company is looking for its profitability. Ratio analysis is calculated with the help of different types of formulas. Ratio analysis help business to provide financial statements. Concerned with how much the company owes in relation to its size. It is improving its situation. Ratio gives very clear view of the financial stability rather than companies individual mathematical figures. Profitability ratio is most frequently used tools in financial ratio analysis. It shows companys performance and stability. Profitability ratio can be divided by margins and returns. All type of ratios can shows companies situation in the market, but ratios can not give any solution for any problem. Using companys profit and loss we can calculate its profitability. Here we will discuss profitability ratio for Pace Leisurewear Ltd. Return on Capital Employed : ROCE goes higher the companys profitability will increase. In year 2008 ROCE was around 20% and in year 2009 it increased to 29%. Even in year 2009 Profit before tax and interest was higher as compare to year 2008,but company also increase fixed assets and current assets. That was the reason companys ROCE is increased by 9% only. Return on Equity : The amount of net income returned as a percentage of shareholders equity. It will help for comparing the profitability of two companies, which are in the same industry. ROE for the year 2008 is 18.1% and in year 2009 was 32.7%,that means is double than 2008.Equity shows the total investment of the company. Higher the ROE goes shareholder get higher return. Dividend increased almost double as well as net profit after tax also increased, it means company is getting good return from shareholders equity. Gross Profit Margin : Gross profit margin prove the percentage of amount remaining after paying cost of sales. Companys total sales minus its cost of goods sold, divided by the total sales, which is represent in percentage. The higher percentage means more the company retain on each sales to its other costs. Gross profit margin for year 2008 was 46.5% and in year 2009 its increased to 48.15%. Because of cost of sales increased by 55% between last two years, it effected on gross profit margin. Companys gross profit increased by 65% over sales which is increased by 60%. Net Profit Margin : Net margin will vary from company to company and most companies will report their net margin both quarterly. it shows business net profitability.Net profit margin for 2008 was 14.99% and in year 2009 it increased by 20.6%.Net Profit after tax increased by around 134.5% over the same period. Increase in net profit after tax is a very good news for companys future. Efficiency Ratio: Company should invest in assets to run its operations. Efficiency ratio calculate how effectively company use its assets. It needs to be managed carefully. A good system of credit control is essential to any organisation. Stock Turnover ratio : It shows the number of days on average money is fixed up in stocks. Stock turnover shows how quickly goods move through the business. Profits must be increased if the rate of stock turnover can be increased. Stock is the part of working capital. Its important for working capital to as early as possible convert stock into cash to save from liquidity problem. In year 2008 stock turnover was 117.73 days and in year 2009 it increased to 182.84 days. Big turnover in days is not good for business because funds are very hard to use somewhere and funds got freeze with stock. Debtors turnover ratio ( days ): It will shows, how efficiently business can collecting its debts and how quickly company can solve debt problem. Short period of debt is not a big harm to company but the longer debt can effect on business badly. In year 2008 debtor turnover was 42 days and in year 2009 it increased to 61 days. It means longer time money will be stuck with debtors. Creditors turnover ratio (days) : This ratio shows ,how many days it takes to paying its debts. Cash must be retained within the organisation for longer period. Creditor turnover days must be always greater than debtors turnover days. Business holding creditors money for longer period so longer days with creditors turnover is good for companys business. In year 2008 creditors turnover in 59 days and in year 2009 it increased to 82 days. It seems to be good compare to debtors turnover days. Liquidity Ratio : Liquidity ratio shows companys ability to repay short term creditors out of its total cash. Current ratio must be in excess of 1. If it is greater than 1,it means ,its fully acceptable. There are two liquidity ration which is very simple to use and very important as well. These ration are :Current ratio and acid test ratio. It can pay its suppliers by having enough working capital. According to balance sheet for 2008,current assets are trade debtors, stock, cash and other debtors. Current liabilities are trade creditors, taxation, dividends, other creditors and bank overdrafts. Current Ratio: Current assets in year 2008 calculated as 4356k and in year 2009 is calculated as 9974k and current liabilities calculated for year 2008 as 2482k and in year 2009 is calculated as 8844k.As if we calculated current ratio should be 2:1,it means business has sufficient current assets to pay current liabilities. Current ratio in year 2008 is 1.8:1,it means company has sufficient liquidity to pay its debts, as year 2009 current ratio shows 1:12.Its increase shows company can pay its short term debts. Quick (acid-test) Ratio : Acid-test ratio does not includes value of stock so this ratio can calculate liquidity more accurate than current ratio. Fast stock turnover companys can keep acid test ratio comfortably less than 1. To calculate acid test ratio we will take out stock value from current assets. In 2008 acid test ratio was 0.8:1,which seems to be not bad. Next if we calculate for year 2009 the acid test ratio shows to 0.5:1which seems to be very unhealthy. Stock calculated in year 2008 was 2418k and in year 2009 is 5820k,it means company keeps more than doubled its stock. Acid test ratio for current year is showing company is in big trouble with its liquidity. Gearing Ratio: Gearing ratio calculate of financial leverage which demonstrate the percentage to which business activities are funded by owner fund versus creditor funds. There is no limitation to how much gearing ratio responsible to be. Company having less than 50% gearing ratio can be specify as a low geared. Also if company having more than 50% gearing ratio can be specify as a high geared ratio. In year 2008 gearing ratio was 34.4% and in year 2009 gearing ratio shows 42.3%.Comparing with this two years, in 2009 company is higher geared than in year 2008.Company top up loan amount by 6600k which is approximately 83%.Company have to pay more interest because of its higher loan and it can be effected companys capital, which they will end up in paying dividends. Last two year ratio clearly shows that company is having difficulty with liquidity in coming years. Top of that bank is going to reduce overdraft by half percent in next six months and this is not affordable by company to fulfil new order which is come from Arena, Pace Leisurewear Ltd have to complete this order to stay in the leisurewear market. Plan of Action : After writing this report for Pace Leisurewear Ltd ,there are few points, which need to be look into, as follows : 1.One positive point is company is highly profitable, but it is very difficult to convince potential investors to invest in company because its gearing ration is high and facing a liquidity problem .Some investor can invest with risks in exchange for future high returns. 2. There is chance to small investment from suppliers and customers after explaining companys future plan and current orders proposal. 3.Try to convert stock in cash for short term. Efficiency ratio shows large number of stock turnover effecting companys cash. 4.Pace Leisurewear Ltd need to be appoint some one who is expertise in financial activities to take control of the finances and investment of the business. 5.Company should be take a total control to expanding business activities, like concentrate on order completion in time. 6.Reduce stock level and minimize debtors collection period for short term. 7.Try to lease, so company can save money on purchasing fixed assets. Total words : 2025 References used for this report : Atrill P. And McLaney E.(2006), Accounting and finance for non-specialists. 5th Edition. London : Prentice Hall Europe Dr. Saeudy M. (2010) Lecture notes, Ratio Analysis, Accounting and Finance module. Tracy J.A. (2008) Accounting for Dummies. 4th Edition. Indiana :Wiley Publishing, Inc

Assumptions and Fallacies Essay

†¢ What are assumptions? How do you think assumptions might interfere with critical thinking? What might you do to avoid making assumptions in your thinking? Assumption is an idea one believes to be true based on prior experience or one’s belief systems. (Elder & Paul, 2002) Assumptions are a part of our belief system but we don’t know that they are true or not. Assumptions are a vital part of our critical thinking. If we used assumptions all the time then we would not be able to use critical thinking. It doesn’t matter where we are at, it is imperative to know all the facts prior to drawing any kind of conclusion or it becomes an assumption. It may be difficult at times to utilize critical thinking but by keeping an open minded aspect will help to prevent assumptions. There is nothing worse than making an assumption and then to be confronted by someone who has all the facts can shatter your confidence. You can avoid this by researching all the facts and utilizing your critical thinking abilities to cover every corner and aspect of your idea or topic. This is the key to keep from making assumptions. †¢ What are fallacies? How are fallacies used in written, oral, and visual arguments? What might you do to avoid fallacies in your thinking? Fallacies are deceptive or misleading arguments that are untrue or unreliable. Fallacies are mainly used to help support a person’s argument when they can’t find factual evidence to back up their statements. Fallacies can be used in many different ways. They are used on purpose in fictional writing and magazines like People. Fallacies can be orally used by someone when they are telling a firsthand story but are only versed in their side so it may come off as unintentional. I see fallacies being mostly used visually popliteal ads and propaganda media campaigns. They get away with most of these fallacies because the amount of time it takes to research the truth usually takes too long before the psychological damage is already done on the public. People tend to trust what others say unless they have found previous fallacies in their statements. I avoid believing fallacies by being conservative in my thoughts. If I see something that I might consider to be fallacious by my past experiences then I do the research to find out the facts. Fallacies and assumptions hold the same key as research will reveal them all.

King Lear Parallelism Essay

Parallelism Between Families Tragedy is defined by a series of unfortunate events that occurs to someone who does not deserve them. When a protagonist makes mistakes, sometimes other characters take the repercussions. Set in a time of royalty and ranks, King Lear describes parallel events of the pursuit of power, recognition, and certain tragic choices. With parallelism, similar occurrences highlight the importance of certain themes. In the play, William Shakespeare juxtaposes Lear’s choices and aftermath those of Gloucester to illustrate how physical and figurative blindness can lead to tragic endings. By showing similarity between Lear and Gloucester’s impulsive actions, Shakespeare shows how making decisions without consideration can lead to the ultimate demise for the innocent. Lear makes rash decisions and is metaphorically blind because he does not listen to the truth and can not see past mere words. His first daughter swoons him by saying, â€Å"Sir, I love you more than word can wield the matter, dearer than eyesight, space, and liberty†¦beyond all manner of so much I love you. † (Shakespeare I. i. 60-65). Lear believes those pleasant praises, however empty they may be. He makes the mistake of basing his ideals on superficiality and rewarding those who could cajole him, which further shows his blindness as a father and king. Like Lear, Gloucester makes similar decisions. His choice of putting his trust where he would be oblivious to bad intentions causes his physical blindness. Neither Gloucester nor Lear can see past simple words and both refuses to see, therefore they are figuratively blind. Their similarity and parallel actions is significant because it intensifies the idea of how blindness can be tragic. Their blindness and fatal errors ultimately lead to the unreasonable death of the guiltless.

The Lottery By Shirley Jackson - 931 Words

In 1948 Shirley Jackson composed the controversial short story â€Å"The Lottery.† Generally speaking, a title such as â€Å"The Lottery† is usually affiliated with an optimistic outlook. However, Jackson’s approach is quite unorthodox and will surely leave readers contemplating the intent of her content. The story exposes a crude, senseless lottery system in which random villagers are murdered amongst their peers. Essentially, the lottery system counteracts as a form of population control, but negatives easily outweigh the positive effects such a system could hold. Surely Jackson’s intentions run deeper than just creating an indifferent short story. â€Å"The Lottery† incorporates a graphic demonstration to expose the prominent consequences of blindly adhering to tradition. Shirley Jackson’s â€Å"The Lottery† uses an array of substantial symbols, diction and irony to present the dangers of tradition and random persecution. The prevalence of symbolism throughout Jackson’s story coveys hidden meaning, and also creates a capturing story line. One of the more substantial symbols used in the story, the black box holds numerous hidden messages and expression created through symbolism. The black box from which the lottery is drawn represents the crumbling tradition that the townspeople still ignorantly follow. It is said that the box is comprised of pieces from the original box that preceded it, dating back to the original villager’s settlement. â€Å"Mr. Summers spoke frequently to the villagers aboutShow MoreRelatedThe Lottery, By Shirley Jackson1195 Words   |  5 PagesOn the surface, Shirley Jackson’s short story, â€Å"The Lottery,† reads as a work of horror. There is a village that holds an annual lottery where the winner is stoned to death so the village and its people could prosper. Some underlying themes include: the idea that faith and tradition are often followed blin dly, and those who veer away from tradition are met with punishment, as well as the idea of a herd mentality and bystander apathy. What the author manages to do successfully is that she actuallyRead MoreThe Lottery by Shirley Jackson757 Words   |  4 Pagessucceed but many fail just like the main character Tessie Hutchinson in Shirley Jackson’s short story â€Å"The Lottery†. When someone hears the word â€Å"lottery†, he or she may think that someone will be rewarded with prize. But â€Å"The Lottery† By Shirley Jackson is different than what one thinks. In the story, a lottery is going to be conducted not like Mega Million or Powerball one play here. In the story, the person who wins the lottery is stoned to death instead of being rewarded with the prize. TessieRead MoreThe Lottery By Shirley Jackson1504 Words   |  7 Pagesâ€Å"The Lottery† by Shirley Jackson In The Lottery Shirley Jackson fills her story with many literary elements to mask the evil. The story demonstrates how it is in human nature to blindly follow traditions. Even though some people have no idea why they follow these traditions. The title of the story plays a role in how Shirley Jackson used some literary elements to help mask the evils and develop the story. The title â€Å"The Lottery† serves as an allegory. When people think of the lottery majorityRead More`` The Lottery `` By Shirley Jackson894 Words   |  4 Pagesshort story â€Å"The Lottery†, author Shirley Jackson demonstrates Zimbardo’s concepts in three different areas: Authority figures, Tradition and Superstition, and Loyalty. The first concept Jackson portrays in â€Å"The Lottery† is the authority figures. Jackson indicates that the lottery is being held in the town center by one authority figure, Mr. Summers, annually on June 27th. Every June 27th, without fail, townspeople gather in the town square to participate in the annually lottery even though mostRead MoreThe Lottery, By Shirley Jackson1510 Words   |  7 PagesShirley Jackson’s â€Å"The Lottery† illustrates several aspects of the darker side of human nature. The townspeople in Jackson’s â€Å"The Lottery† unquestioningly adhere to a tradition which seems to have lost its relevance in their lives. The ritual that is the lottery shows how easily and willingly people will give up their free will and suspend their consciences to conform to tradition and people in authority. The same mindless complacency and obedience shown by the villagers in Jackson’s story are seenRead MoreThe Lottery By Shirley Jackson8 11 Words   |  4 Pagesâ€Å"The Lottery† was published by Shirley Jackson. 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Although the villagers in â€Å"The Lottery† are terrified of the goal of the lottery and the black box, they are unwilling to let go of the tradition. Shirley Jackson portraysRead MoreThe Lottery by Shirley Jackson799 Words   |  4 Pagesthe mood and to foreshadow of things to come. The Lottery by Shirley Jackson is a story in which the setting sets up the reader to think of positive outcomes. However, this description of the setting foreshadows exactly the opposite of what is to come. In addition, the theme that we learn of at the end leads us to think of where the sanity of some human beings lies. The story begins with the establishment of the setting. To begin, Shirley Jackson tells the reader what time of day and what time ofRead MoreThe Lottery by Shirley Jackson1764 Words   |  7 Pagesfilled with excitement and eeriness, leaving the reader speechless. 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