Financial Analysis

Introduction

Aims of the Study

This paper aims to identify the issues because of which the Aflac is making losses and how its performance could be improved.

Findings

The given financial statements of both the restaurants are analyzed through ratio analysis method and the results were as follows:

Ratio Comparisons

Ratio Type

Aflac

Met Life

 

 

 

I. Liquidity Ratios

 

 

 

 

 

   1. Current ratio

0.7097

0.6719

 

 

 

   2. Current money liability treatment ratio

0.3023

0.2736

 

 

 

   3. Accounts Receivable Turnover Ratio

1.0753

0.9690

 

 

 

   4. Average Collection time span (Average Age of Receivables)

339.4532

376.6793

 

 

 

   5. Inventory Turnover Ratio

8.1878

7.5485

 

 

 

   6. Days in Inventory (Average Age of Inventory)

44.5785

48.3541

 

 

 

II. Solvency Ratios

 

 

 

 

 

   1. Debt-to-Total Assets ratio

0.8677

0.7784

 

 

 

   2. Times Interest acquired (Interest treatment) ratio

6.3019

5.8495

 

 

 

   3. Cash Debt Coverage ratio

0.1250

0.1259

 

 

 

   4. Free Cash Flow

192,000 156,000

 

 

 

III. Profitability Ratios

 

 

 

 

 

   1. Gross Profit Rate

0.4186

0.4398

 

 

 

   2. Profit Margin Ratio 

0.0895

0.0937

 

 

 

   3. Return-on-Assets Ratio (ROA)

0.1028

0.0998

 

 

 

   4. Asset Turnover Ratio

1.1477

1.0652

 

 

 

   5. Return-on-Equity Ratio (ROE)

10.9333

10.5248

 

 

 

Analysis

Inventory Management

Inventory administration is a necessity in every enterprise, but more and more bistros are recognizing that it can be the difference between achievement and failure.

Inventory administration is the method of commanding charges and waste through productive use of on-hand product. Combine this with a reliable forecasting model and restaurants can realize dramatic reductions in their monthly spending (Horngren, 2002).

Every business is faced with the regrettable truth that employees will steal from their employer. A productive inventory administration system blended with secure storage and lock-up methods will result in far less decrease due to worker theft.

In the bistro commerce there are mainly three kinds of inventory administration systems: Manual or restricted Integration, blended P.O.S. or Partial Integration and Fully-Integrated.

Manual or Limited Integration

Manual inventory administration mentions to the process of bodily counting each piece every week to obtain bistro costs. This scheme is more suited to lesser, independently-owned operators who purchase fewer pieces and sustain easier accounting records.

Once all counting is accomplished, then data can then be moved to the restaurant's accounting system. If there are no mistakes, the inventory is complete. If there are mistakes although, the entire inventory process must start afresh to find the mistakes.

Mixed P.O.S.

Mixed issue of Sale (POS) or partial integration, blends the restaurant's POS system with manual inventory procedures. Point of sale mentions to the computer system utilized to order food and beverages as well as resolving all checks.

Each time a piece is organized through the POS it is taken from the present inventory. When the pieces are counted throughout inventory, the on-hand stock should agree the inventory listed by the POS. If although, there are discrepancies between the two lists, another personal enumerate of the inventory should begin.

This procedure of inventory management is more effective than the limited scheme, and when blended with strong loss-prevention procedures can result in large cost decreases per month.

Fully-Integrated

A fully-integrated inventory management scheme implements three distinct elements into its system. It blends the bistro POS system with an Ordering/Shipping system as well as an electrical devices personal inventory system. This is the most sophisticated and unquestionable of the three schemes and outcomes in the least allowance of monthly and general decrease of merchandise and profits.

The inventory administration and food ...