FINANCIAL ANALYSIS

RN TEMP SERVICES



RN TEMP SERVICES

The organization selected for this Assignment is “RN TEMP SERVICES .” RN TEMP SERVICES seeks financial assistance and support from a number of finance sources. However, each of these sources may have certain implications such as source control, ownership and tax effect on the newly set-up business and its operations.

Financial Ratios in Decision Making for RN TEMP SERVICES

During given time period, RN TEMP SERVICES posted a current ratio of 1.67, which shows a relatively better liquidity position. In addition to this, acid test ratio of the firm was reported to be the same, which means that RN TEMP SERVICES has adopted JIT or other appropriate system to improve the efficiency of inventory management.

Current Ratio

Formula

Current Assets

 

Current Liabilities

Working

750

 

450

Current Ratio=

1.67

 

 

Current Ratio for RN TEMP SERVICES

Acid Test Ratio

Formula

Cash + A/R + Short term Investments

 

Current Liabilities

Working

350+140+260

 

450

 

750

 

450

Acid Test Ratio=

1.67

 

 

Acid Test Ratio for RN TEMP SERVICES

RN TEMP SERVICES 's ROCE was noted to be 17%, which shows better profitability and improved business efficiency in managing capital investments. The firm posted 61% gross profit margin that reflected well managed control over production costs and business sales. In addition to this, the firm reported 20% net profit margin, which showed improved business performance.

Return on Capital Employed (ROCE)

Formula

EBIT

 

Assets - Current Liabilities

Working

180

 

1500-450

 

180

 

1050

ROCE=

17%

 

 

ROCE Ratio for RN TEMP SERVICES

Gross Profit Margin

Formula

Gross Profit

 

Sales

Working

550

 

900

GP Margin=

61%

 

 

GP Margin Ratio for RN TEMP SERVICES

Net Profit Margin

Formula

Net Profit

 

Sales

Working

180

 

900

NP Margin=

20%

 

 

NP Margin Ratio for RN TEMP SERVICES

Analysis of Capital Structure of RN TEMP SERVICES

RN TEMP SERVICES may determine gross profit by deducting COGS from revenue. On the second step, the firm may add other income sources and deduct business expenses in order to estimate the net profit for the business (Middlesex Manor Nursing Centre, 2009, p. 3). On the contrary, a business may use single step format to identify ...