Ca 1 - Principles Of Accounting

: As the new Chief Executive Officer of OHC medical exam Center , I would energize to father use of the fiscal information of the organization to assess the monetary health of OHC and start out important boundinations regarding current and future operations of OHC . Since the present fiscal information for 2006 and 2007 of the organizations is a reflection of what happened in the past , I must use the similar to guide the phoner to find attain its objectives especially on the financial aspectTo the do the equivalent I will have to evaluate first the lucrativeness , liquidity and then solvency of the organization using following financial ratios as extracted from the party s financial statements 2006 2007 Net Income 37 ,370 ,000 34 ,177 ,000 16 ,718 ,000Net Profit Margin 0 .64 0 .69Return on Assets 0 .84 0 .69Return on Equity 11 .58 2 .04Current Ratio 1 .51 2 .11Debt to Equity Ratio 12 .77 1 .95 Profitability tells whether the company is earning well in commensurateness with expectations and objectives . The medical center appears to be really profitable at the net profit margins of 0 .64 and 0 .69 for the age 2006 and 2007 on an individual basis . This means that the company is earning much than fractional of its revenues which if expressed in simple terms could mean that for both ten-dollar revenue , the company is earning 64 cents and 69 cents for the years 2006 and 2007 respective(prenominal)ly , which ar very high . No wonder the guide on assets reflected 0 .84 and 0 .69 for the years 2006 and 2007 respectively . The same comment is more evident in the very high return on justness which was reflected at 11 .58 and 2 .04 for the years 2006 and 2007 respective .

In practical terms , investors earn more than eleven times from their 2006 investment while more than image in 2007The very diaphanous gainfulness is also obvious in its impact on company s liquidity which was reflected at 1 .51 and 2 .11 for the years 2006 and 2007 respectively . Since liquidity (Helfert , 1994 ) measures the capacitor of the company to meets its currently maturing obligations it goes without saying creditors need not dumbfound since they have a very low risk in extending credit to the companyThe good impact of the company s profitability (Brigham and Houston ,2002 ) is come on reflected in the company s solvency (Meigs and Meigs , 1995 ) which speaks for the want-term health of the organization A debt to beauteousness ratio of 12 .77 in 2006 which cutifi cantly improved to 1 .97 in 2007 could only show a proven soldiers capability and stability of the organizationOn the basis of the company s proven profitability , it whitethorn be concluded that the company is delivering the expectation of owners and managers and separate decision makers are expected . An earning company is a sign of sanitary one that could assure the company of its short term and long term...If you want to get a full essay, commit it on our website: OrderCustomPaper.com

If you want to get a full essay, visit our page: write my paper