Financial Performance of Pace Leisurewear Ltd Case Study

Financial Performance of Pace Leisurewear Ltd - Case Study ExampleFinancial statement analysis involves, comparing the execution with that of other firms in the same industry and evaluating trends in the firms fiscal position over time. These studies help management identify deficiencies and then take actions to improve performance.For evaluating the financial performance of the firm ratio analysis and Du Pont system are used. According to Fraser, L. (2001) & Ormiston, A. (2001) the subordinate classifications of ratio analysis areAccording to Fraser, L. (2001) & Ormiston, A. (2001) The available cash resources to play the occurrent obligations must come primarily from cash or the conversation to cash from of other current asset. For interpreting the liquidity of the firm, several types of ratios have been depicted. online ratio, quick ratio, cash flow liquidity measures the firms short-term solvency. Firms ability to meet the current obligations can be judged. Liquidity position or effects of development debt can be evaluated. The available cash resources to satisfy the current obligations must come primarily from cash or the conversation to cash from of other current asset. To judge the long-term financial position of the firm, financial leverage ratios are used. Brigham, E. (2007) & Houston, J. (2007) mentioned that these ratios indicate mix of funds provided by owner and lender. According to Fraser, L. (2001) & Ormiston, A. (2001) the amount and ratio of debt in a companys capital structure is extremely important because of the trade off between risk and return. Gross profit margin, operating profit margin, and lucre profit margin represent the firms ability to translate sales dollars into profits as different stages of measurement. Administrative efficiency can be judged through this. Brigham, E. (2007) & Houston, J. (2007) assessed the primed(p) asset turnover ratio measures how effectively the firm uses its fixed assets and total asset turnover me asures the turnover of the entire firms asset. So, Debt ratio, debt to equity ratio, long tem debt to total capitalisation ratio have been drawn.Ratio AnalysisLiquidity Ratio Short-term SolvencyYear before lastLast yearCurrent1.761.13Quick1.100.47 bills flow liquidity0.30The current ratio of the firm indicates that at the end of year current asset covered current liabilities 1.13