End of Course Assignment Example | Topics and Well Written Essays - 2500 words

End of Course - Assignment Example Third is the aspect of the balanced scorecard that would help the company improve its operations. Last are the benefits and drawbacks of zero-based approach to budgeting for the business. This section contains the analysis of the Brown Bear Leisure’s financial statement, using relevant ratios, for the two-year period (2014 and 2015). The ratios are as follows: profitability ratios, liquidity ratios, and efficiency ratios. Net profit margin- this ratio shows how well a company manages its operating expenses such as the administrative costs and interests on borrowed funds. The higher the ratio, the lower the operating expenses of the enterprise. Concerning Brown Bear Leisure Company, the net profit margin for the year 2014 and 2015 have been determined as 7.07% and -0.53% respectively. The ratio interpretation for the fiscal year 2014 means that only 7.07% of the company’s revenue were net profit, whereas, remaining 92.93% were consumed by the operating expenses. However, in the year 2015, the ratio is negative reflecting the loss made by the company during that period. Net profit margin decreased between the two periods due to a sharp decline in the profit from positive to negative (Loss). Based on the analysis, the company’s operating expenses are excessively high, which indicates the ineffectiveness of the company’s cost management methods. Therefore, it is justified to mention that the company’s value creation ability is dwarfed by the high level of operating costs (Baker & Powell 2005, pp. 3-10). Gross profit margin- the ratio indicates a company’s financial health after meeting the cost of sales. It also shows the company’s ability to pay for future operating costs. Concerning Brown Bear Leisure Company, the gross profit margin for the year 2014 and 2015 have been determined as 41.24% and 34.46 % respectively. The ratio interpretation for the fiscal year 2014 means that 41.24% of the company’s revenue were gross