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Conduct a financial analysis using 4 types of financial ratios for three year period (include numbers for your industry or children’s nest)?

 

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Financial analysis is a crucial tool used by companies to assess their financial health. It involves evaluating four types of ratios: liquidity, activity, profitability and solvency. This financial analysis for the last three years of the Children’s Nest will reflect how well it has been performing financially as a company.

Liquidity ratio measures a business’s ability to pay short-term debt obligations with current assets (Nixon, 2020). The quick ratio was 0.89 in 2018 then dropped to 0.82 in 2019 before increasing again in 2020 at 1.16. The current ratio rose steadily from 1.43 in 2018 to 1.71 in 2019 and 2.03 in 2020 (Children’s Nest Financial Statements, 2018-2020). According to industry benchmarks established by Dun & Bradstreet (2019), these numbers indicate that Children’s Nest is able to cover its liabilities over time using readily available liquid assets or cash equivalents when meeting its short-term debts and other needs such as accounts payable payments, wages or rent/lease payments due within 12 months if needed be (Dun & Bradstreet Corporation, 2019). This indicates that the business is generally healthy and can fulfill any unexpected expenses with relative ease without having difficulty fulfilling day-to-day activities or operations which makes this an attractive position for investors considering investing into the company due to its strong liquidity position over time

Activity ratio measures how efficiently resources are managed within organizations (Nixon, 2020). Inventory turnover decreased from 6 times per year in 2018 down 4 times per year by 2020 indicating there were not enough sales being made even though inventory levels could have been reduced further during these periods as supply chain operations were still maintained at optimal levels throughout this period . On the other hand asset turnover increased from 1 times per year up 3 times per year during this period indicating that more effective use of assets became better utilized over time across all areas of operations leading upto greater sales performance overtime both domestically and internationally through numerous acquisition deals across many regions globally

Profitability ratios measure how efficient businesses are at generating income relative to their expenses(Nixon, 2020). Gross margin percentage remained relatively steady between 21%- 28% since 2018 suggesting there hasn’t been any significant changes either positively or negatively overtime however net profit margins did increase significantly rising from 7% up 10 % during this period suggesting management strategies have become increasingly successful at reducing costs while maintaining high levels customer service leading towards increased sales performance overall.

een a cost-saving tool that has significantly reduced overtime and saved the department thousands of dollars each month. Before implementing the cost management process of LEAN, the department was spending upwards of $1,000 per month in overtime for each employee, and there are 30 employees in the department. After streamlining our accounting processes to be more efficient, the department is now saving approximately $30,000 per month in overtime wages. The organization is in the process of implementing LEAN in every department; therefore, we do expect to see a drastic drop in unnecessary expenditures over the next several months. In addition to reducing overtime wages as a cost management mechanism, there are a tremendous amount of delays in billing, including too many people involved in different parts of the process (Deschenes, 2012). If there’s a better flow, if people are handing off the work to the next person in the chain immediately, then bills are sent out in a couple of days instead of a couple of weeks. It’s also incredibly important to make sure invoicing is being done properly. If mistakes are made and proper preauthorizations aren’t followed, but procedures are done anyway, hospitals might be voluntarily giving away revenue. This is another area where the use of LEAN, or any other cost-saving metric, can be utilized for the benefit of the organization. A second managerial accounting technique used is quality control. Quality control is essentially a set of quality standards enforced by management to ensure that products and/or services are at a specified level before being offered to consumers. These control metrics can include a wide array of protocols to ensure products meet safety, dependability, and satisfactory requirements, among others (“Quality Control Definition | Investopedia,” n.d.). A major element of quality control is implementing these standards in a way that all employees fully understand and adhere to follow. Room for error can be greatly reduced by specifying which production activities are to be completed by which personnel; thus, reducing the chance that employees will be involved in tasks for which they do not have proper training. Although I am not employed in a manufacturing industry, the healthcare industry employs quality control standards unique to each department. For example, I work in Research Finance on the accounting team. The department also has a budget team and an invoicing team that has specific responsibilities for research projects and patients. One of our quality control measures is that the accounting team is not allowed to negotiate and/or prepare budgets; only the budget team is capable of this task due to th

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