Corporate Financial Reporting and Taxation Essay

Corporate Financial Reporting and Taxation - Essay Example The year 2012 has been marked the company’s growth in the value of net assets. This, therefore, essay covers analysis of the company’s financial statements for the year 2012, risk of a possible corporate failure and the importance of the objectivity and integrity in the preparation of the financial statements (Financial Statement: the IP group, pp. 1-9). Return on capital employed (ROCE) – capital employed is total assets – current liabilities. Therefore, return on capital employed ratio indicates the return generated by every pound invested as capital employed. Concerning the IP group, the ROCE for the year was 15.5%. The interpretation of the ratio goes that in 2012, 15.5% of the company’s net profit was generated by the company’s capital employed. This ratio can also be used by investors to determine the required rate of return on investments. Generally, a lower return on capital employed than the cost of capital is not preferable to investors (Duncan Hughes, Asset management in theory and practice, pp. 42-44). Net profit margin – the ratio indicates a company’s financial health after meeting the cost of sales and the operating expenses. It also indicates the company’s ability to pay for future operating costs. Concerning the IP group, the ratio for 2012 was 77.5%. This means that in the year 2012, 77.5% % of the total revenue were net profit, whereas, the remaining 22.5% of sales were consumed by the company’s operating costs. From this analysis, it can be concluded that the level of operational efficiency for IP group was high due to the effective cost management strategy. (Sarngadharan M. & Kumar R. S. Financial analysis for management decisions, pp. 121-135). Net profit margin before tax – this ratio shows how well a company manages its operating expenses. The higher the ratio, the lower the operating expenses of a company. The opposite is true.

Credit Crunch Essay Example | Topics and Well Written Essays - 500 words - 5

Credit Crunch - Essay Example This paper briefly analyses the major reasons for the credit crunch started in the last year. The major reason for the current financial crisis is the unwise lending habits of the financial institutions like banks. â€Å"Banks found ways to increase the number of mortgage loans through strategies such as interest only mortgages, 100% mortgages and lending to people with poor credit histories† (Who is to Blame for Credit Crunch?). American public have the habit of spending all the money they earned without saving anything for the future. When they are need of money they approached the banks and the banks were ready to give them loans as much as they required, without assessing their financial capabilities. Banks never calculated that an economic crisis like the current one may happen in near future. The banks thought that the global economy is a renewable source. They consider it as an ocean of wealth which will never be exhausted. The allocation of resources in the case of a bank is mainly the loans of different forms to the customers. This allocation has not been don e properly by the banks. They have allotted loans to all the people irrespective of the financial strengths of the customers. They have not conducted any reviews to assess the financial setups of the customer at present and also they failed to forecast the future. On the other hand, the greedy customers accepted all the offers from the banks with both hands. They have approached the banks for everything and the banks were ready to fulfill their dreams. The banks were too focused on selling their goods or services rather than buying the goods or services. They thought the success of banking business rest on selling rather than purchasing. They never bothered too much about the returns against the services they provided. In their opinion, American economy was capable of facing any challenges or threats from the