The purpose of this report is to explain the financial positions of Beach Ltd for the year

2018 and 2019. The audience of this report are Beach Ltd management and their stakeholders.
The report examines the finance performances of the company for the two years by examining
items taken from either statement of financial position and statement of financial performance.

From the financial statements, starting with income statement, the company has a positive
increase from 2018 to 2019. The company profit margin increased by a 24% from 2018 to 2019.
This was brought by increase in sales by 9% as per the horizontal analysis and reductions of
expenses by 82.75% as compared against the sales for 2019 by vertical analysis. Cost of sales
increased by a margin of 4% but compared with sales for that period 53% less to 2018 which was
55%. The selling and administration was 20% for 2019 as compared with 21% for 2018 and had
increased by 5% in both period comparisons. Interests Expense increased by 1.35% as compared
to sales and had the huge increase between 2018 and 2019. Also income tax expenses increased
by 27% compared to 2018 and against sales 7%. Profits increased by 17% compared to sales for
2019 and 15% for 2018 sales and thus caused to have a significant growth when the two periods
are compared.

In the statement of financial position, horizontal analysis, the company increased its total
assets in 2019 by 11% which was affected by reduction of marketable securities by 17%. This
was caused by increase in account receivables, inventory and property plant and equipment. The
liability also increased by the same percentage and it was affected by increase in note payables,
equity shares and retained earnings. In vertical analysis, the general movement for the two
periods show a small difference and thus only in inventory, note payable and retained earnings
had changes for the two periods. From the above analysis, the company should continue
increasing it sales as well as reducing the selling and administration expenses as we can see the
strategy is working for their bottom line. The company should reduce its uptake on the notes
payable as it might lead to increase in interest expense as evidence in the analysis of the financial
statements. Since as per the financial statement the company did not pay the dividend, it should
retain it to build its capital base to strengthen its total assets ratios. The percentage increase in
sales is a positive trend which the company should continue advocating for increased profits
whereas minimizing costs.
Other areas examined are the Ratio analysis. These include Liquidity ratio, efficiency ratio,
profitability ratio, coverage ratio and market prospect ratio.

1. Liquidity ratios

This is a financial metric which is mainly used to determine a debtor's ability to pay off current
debts responsibilities without necessarily raising external capital (Judith & Baker, 2003). The
company, looking at its current ratio, has the ability to meet its current obligation since the
current ratio is 2.1. And quick ratio of 1.3 meaning not much of it cash is held as inventory.

2. Efficiency Ratios

This shows how a company utilizes it assets and liabilities to maximize it revenues. This ratio
measures a business ability to use its assets and manage its liabilities effectively in the current
period or in the short-term (Ryan, 2004). They include asset turnover ratios of 1 means Beach
Ltd uses $1 to make $1 revenue. Beach Ltd has an efficient inventory turnover of 8 days. Its
Average collections periods of it debt is 57 days which is good with high receivable turnover and
thus has quality customers who pays promptly.

3. Profitability ratios

These are financial metrics used by a business analyst and financial investors to measure and
evaluate the ability of a business or company to generate profit in relation to revenue balance
sheet assets (Thukaram, 2007). Beach Ltd has high profitability ratios as the return on assets and
profit margin is at 17% and this makes it possible to generate more revenue as it increases it asset
base. The positive profit margins show the company ability to generate more revenue before
interests and expenses.

4. Coverage Ratios

This is any one of a group of financial ratios used to measure a business ability to pay its
financial obligations. The higher the ratio, the greater the ability of the company to meet its
financial responsibilities while a lower ratio indicates a lesser ability. This includes the time
interest earned ratios which for Beach ltd is 18 times to cover it debts and thus it is constraining
itself to serve other business investment.
 5. Market Prospect ratios

This include the earning per share, price/earnings ratio and dividend pay-out ratio which for
Beach Ltd, are 3.2, 8.92 and 84% and thus the company has positive ratios and thus able to invite
investors to increase its asset base.

In conclusion, the company performance has improved over the last one year with many items
indicating an increase in performance.
REFERENCES

Judith J.B, Baker R.W (2003). Health Care Finance: Basic Tools for Nonfinancial Managers.
Dallas, Texas, Jones & Bartlett Learning

Ryan B. (2004). Finance and Accounting for Business. Croatia, Cengage Learning EMEA

Thukaram R. M.E (2007). Management Accounting. New Delhi, New Age International
Appendix

Graphs that visually illustrate the company’s overall financial situation and performance

Chart Title

800,000.00
700,000.00
600,000.00
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400,000.00
300,000.00
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100,000.00
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INCOME EXPENSE NET PROFIT

2018 2019

percentages
30%

25%

20%

15%

10%

5%

0%
 Chart Title

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600,000.00

400,000.00

200,000.00

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Total Assets Less Total Liabilities Net Assets End Year
(200,000.00)

(400,000.00)

2018 2019

Chart Title
1,200,000
1,000,000
800,000
600,000
400,000
200,000
0

2018 2019