I-events
Financial Health
I-events is a small events company which was established only two years ago the financial information I have been provided span over the second year of business, I will look at all the information I have produced to assess the financial health of I-events.
The first figure that I shall look at is the sales, which is £195,000. For a small business it has a healthy Sales figure as the Gross profit margin 58.35% meaning for each event they take on board they will take in 58.35% of the payment to cover the cost of operations or profit for the business, with a cost of sales being 41.65% per event gives I-events a healthy gain to their business for every event which is planned, making this business’ product very efficient, now the possible problems on the business are the expenses and the number of clients. First I shall look at the expenses of the operation.
Looking first at the total expenses of £96,010 which is almost 50% of total sales figure (49.2%) a rather large percentage of amount of money coming into the business. The highest value and most notable expenses is the wages is the salaries and wages of the employees being £77,000. Suggesting the wages and salaries are too high, the option of redundancy cut backs on staff could be an option to increase the net profit. Because of such high expenses the net profit is only £17,766. With such a profitable raw product and a £195,000 in sales, the net profit is rather disappointing. Which explains why the break-even point is rather high and the margin of safety is low. Which shall be discussed later. Now to look at the financial health, using the balance sheet.
Current assets: £10,278. Fixed assets: £11,000. Liabilities: £4,512
Both current and fixed assets ar ...