Anthony Unit 2 5 Final Project
Consultancy Report for Anthony’s Orchard
Section 1 : Financial Analysis
An accurate view over the current financial state of Anthony’s Orchard is given by the value of the financial ratios.
The financial ratios are calculated based on the 2011’s income statement and based on 2011’s Cash Flow. a. Financial ratios based on the Income Statement:
Gross Margin – Overall, the gross margin registered in 2011 reaches 17% which indicates that the company is using efficiently its resources and it has a strict control of its costs.
Analizing the gross margin splited by each one of the three most important activities of Anthony’s Orchard, we can notice that “Community Events” activity has registered the highest value (39%), followed by “Pick your Own Apples” activity (16%). The “Prepared Apple Products” activity reports the lowest value (11%).
Profit Margin – We can calculate the profit margin using the following formula:
Profit Margin = Profit after tax / Revenue = 371,147/11,005,208 = 3.37 %
A profit margin of 3.37 % indicates that Anthony’s Orchard is a profitable company, which is efficient at converting sales into actual profit.
Earnings Before Tax - Formula:
EBT= Revenues – Expenses (excluding tax) = 11,005,208 – (9,106,901 + 1,045,000 + 234,728) = 618,579$
EBT in amount of 618.579 indicates that Anthony’s Orchard registered an consistent operating performance without considering tax implications, which will have a positive impact on the investors opinion.
Times Interest Earned = Earnings before tax and interest / Interest expense = 11,005,208 – (9,106,901 + 1,045,000) / 234,728 = 3,63
A Times Interest Earned is a solvancy ratio measuring Anthony’s Orchard ability to pay off its debt.
The specific value of 3,63 shows that the company has a high capacity to cover its debts.
Return On Equity (ROE) = Net income after tax / Shareholder’s equity
ROE =
Section 1 : Financial Analysis
An accurate view over the current financial state of Anthony’s Orchard is given by the value of the financial ratios.
The financial ratios are calculated based on the 2011’s income statement and based on 2011’s Cash Flow. a. Financial ratios based on the Income Statement:
Gross Margin – Overall, the gross margin registered in 2011 reaches 17% which indicates that the company is using efficiently its resources and it has a strict control of its costs.
Analizing the gross margin splited by each one of the three most important activities of Anthony’s Orchard, we can notice that “Community Events” activity has registered the highest value (39%), followed by “Pick your Own Apples” activity (16%). The “Prepared Apple Products” activity reports the lowest value (11%).
Profit Margin – We can calculate the profit margin using the following formula:
Profit Margin = Profit after tax / Revenue = 371,147/11,005,208 = 3.37 %
A profit margin of 3.37 % indicates that Anthony’s Orchard is a profitable company, which is efficient at converting sales into actual profit.
Earnings Before Tax - Formula:
EBT= Revenues – Expenses (excluding tax) = 11,005,208 – (9,106,901 + 1,045,000 + 234,728) = 618,579$
EBT in amount of 618.579 indicates that Anthony’s Orchard registered an consistent operating performance without considering tax implications, which will have a positive impact on the investors opinion.
Times Interest Earned = Earnings before tax and interest / Interest expense = 11,005,208 – (9,106,901 + 1,045,000) / 234,728 = 3,63
A Times Interest Earned is a solvancy ratio measuring Anthony’s Orchard ability to pay off its debt.
The specific value of 3,63 shows that the company has a high capacity to cover its debts.
Return On Equity (ROE) = Net income after tax / Shareholder’s equity
ROE =
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