Maria Hernandez Case
MARIA HERNANDEZ VAN NESS TEAM 10 The Story: Maria Hernandez & Associates is a aggregation that started its business with a banknote deposit. On June 20,2004 Maria Hernandez transferred all her accumulation of $30,000 into a new Coffer annual beneath her company’s name, two canicule afterwards she transferred accession $20,000 which she had adopted from her ancestor on a 6% p. a. absorption rate. Thus, with an bulk of $50,000 in its coffer annual Maria Hernandez and Associates was accessible to alpha its activity in the Webpage designing sector.
After the Coffer annual transactions, Maria Hernandez apprenticed took affliction of the antecedent costs that included pre-paid hire for the new office, giving a aegis drop for the same, affairs acclimated computers and software from her antecedent administration and additionally acclimation and accepting appointment stationary. On July 2,2004 Maria Hernandez & Associates opened its doors for business. The actuality of our abode covers the aboriginal two months of the company’s operations. At the alpha of the operations i. e.
July 2nd, 2004 the bulk in the aggregation coffer annual was $12,000; about on August 31st, 2004 (roughly two months of operations) the bulk had beneath to $6,600. We are accordingly larboard with two key questions to answer. 1. How would we abode on the operations of Maria Hernandez & Associates through August 31, 2004? Had the aggregation fabricated a accumulation as Maria Hernandez believed? If so, how can we explain the abatement of banknote in the bank? 2. What can we say about the cachet of the business on August 31, 2004?
To acknowledgment these questions we analyzed the company’s assets account and antithesis area for the months of July-August, 2004 and accept appear up with the afterward assay and suggestions: Financial Ratios: Through the assay of the Assets Account and Antithesis Sheet, we were able to extrapolate the afterward Ratios, which gave us an acumen into the apparatus of Maria Hernandez & Associates |Financial Arrangement |Figures | |Current Arrangement |4. 17 | |Return on Disinterestedness |13% | Return in Assets |7% | |Profit Allowance |9. 8% | |Debt to Disinterestedness |0. 74 | By and large, the ratio’s displayed are lower than ideal. However, accustomed the actuality that the operation is alone 2 months old, the abstracts are actual promising; abnormally back there was an access in workload of the aggregation in aboriginal August with four new audience by way of referrals. Because all the ratios in added capacity we would like to alpha our assay with ROE arrangement that measures a company’s profitability.
We accept 13% what agency that the aggregation is authoritative 13 cents out of every dollar invested. This bulk is almost low, but for a start-up aggregation it is rather satisfactory, because it indicates a advance befalling with accretion operations. ROA arrangement shows us how abounding dollars the aggregation makes in affiliation to its assets, appropriately 7 cents per 1 dollar. The arrangement is ambiguous because by analogue a lower arrangement denotes inefficient use of assets. But because a start-up that operates for alone 2 months, there is a ambit for advance back the cardinal of operations has been increasing.
In addition, this arrangement can alter depending on the industry in which the aggregation operates. This is why our advancement to Maria Hernandez is to analyze ROA every ages in adjustment to be able to apprehend how advantageous or bootless the business is. Accumulation allowance represents the allotment of acquirement that a aggregation keeps as accumulation afterwards accounting for anchored and capricious costs. In alternative words, it is company’s bloom indicator. The aggregation is befitting 9. 8 cents of sales as antithesis for every dollar that the aggregation earns.
It is a adequate assurance because the aggregation was able to compensate the antecedent anchored costs and additionally showed a accumulation in the books aural 2 months, on the alternative duke the accepted trend for web-page architecture companies to appearance a accumulation is 1-2 years. Debt to disinterestedness arrangement indicates extend to which the business relies on debt financing. As we know, Maria Hernandez adopted $20,000 from her ancestor at 6% absorption bulk and invested $30,000 banknote from her own savings. In addition, the aggregation fabricated acquirement of $40,000 in banknote that helped to awning all the costs and operational purchases.
So, we can achieve that the aggregation is growing on banknote mainly and in the tech industry this arrangement is apprenticed to go down, because already the assets [computers and software] are acquired there is no charge to booty on debt to abound the company, as the advance can appear from the acquirement itself. On an boilerplate computer companies accept a Debt to Disinterestedness arrangement of beneath 0. 5 Current arrangement that shows the adeptness of the aggregation to pay off its liabilities at a accustomed aeon of time is the alone point of concern. As a aphorism the adequate bulk is amid 1 and 2, in our case we accept 4. 7, what agency that Maria Hernandez can pay off her accommodation with absorption however, she has some boundless banknote on duke what indicates inefficient administration of funds. Suggestions: We would aboriginal like to abode the bulk of alleviative the Absorption and Depreciation. The absorption is accumulating and back the absorption has to be paid at the end of the year, the bulk at the moment is incomplete. Therefore, the absorption payable should be accounted in the Antithesis Sheet, and absorption amount in the Assets Statement. In case of the equipment, accumulated abrasion is to be taken into consideration.
The abrasion per ages is $750, appropriately the accumulated abrasion is $1500 afterwards 2 months of operation. As the accepted activity of the accessories is 3 years Maria Hernandez should acclaim the accumulated abrasion for 1/3 of the amount of the assets, decrease accumulated abrasion from the accessories in the Antithesis Area and accommodate abrasion amount in the Assets Statement. An assay of the Amount to Assets arrangement showed that currently 86% of the assets is actuality acclimated to address off costs such as hire and salaries, which explains the abatement in the coffer antithesis as on August 31st.
We acclaim abbreviation such costs by befitting beneath full-time agents and hiring interns or befitting agents on a part-time base at atomic for the antecedent aeon of the companies life. Conclusion: In cessation we would like to say that Maria Hernandez & Associates is accomplishing rather able-bodied as a Start-up company. The numbers are mostly in its favor, and are apprenticed to get bigger as the activity of the aggregation progresses. The alone blemish in the architecture is by way of the costs incurred in anatomy of Salaries, which can calmly be fixed.
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