Sakae Sushi financial analysis

From the balance sheets, it can be seen that the current assets for the group are $19. 5 million in 2012 and $16. 7 million in 2011, while the current liabilities are $29 million for 2012 and $22. 5 million for 2011; the percentage difference between the current assets and current liabilities are 48. 7% and 34. 7% respectively. This shows that Sakae Holdings have problems dealing with short term debts. The non-current assets for the group are $65. 8 million in 2012 and $47. 7 million in 2011, while the non-current liabilities are $18. 4 million for 2012 and $14. 6 million for 2011. This shows that Sakae Holdings have absolutely no problems dealing with long term debts.
From the income statement, Sakae Holding’s group revenue in 2012 was $95. 9 million, showing an increase of 7. 5% variance when compared to $89. 2 million in 2011. The gross profit in 2012 and 2011 was $68. 7 million and $62. 8 million respectively. The percentage variance saw an increase of 9. 4%. The amount of expenses incurred in 2012 was $64. 1 million and $62. 1 million in 2011, showing an increased percentage variance of 3. 2%.
There was no profit in 2012 in which the group accumulated a loss of $6. 8 million while 2011 saw a profit of $5. 5 million, with a percentage variance of 223. 8%. Explain why sales, gross profit and net profit rose or fell. The Japan tsunami incident in 2011 is a probably factor that caused a dip in sales during that year, resulting in 2012 having “increased” sales and gross profits. The only net profit gained was in 2011, which was odd considering lower sales in comparison to 2012, which suffered an incredible loss.

The loss was mainly attributed to impairment loss on investments in associates that put them in the negative. Is gearing level appropriate to the company, given the economic outlook? Gearing level is measured using the debt-to-equity ratio for this report. Based on the figures from the relevant financial statements, the debt-to equity ratio measures 125%, a slight decrease from the previous year of 137%. This may goes to show that the company is starting to take corrective actions for this problem.
However, both these figures still indicate that Sakae Holdings Ltd. may be having trouble paying their long term debt and their ability to withstand operating losses incurred by the business is not that firm. Conduct horizontal and/or vertical analysis where appropriate Vertical Analysis Based on the above vertical analysis, it is certainly a good sign to see that the gross profit is 77. 09% of the total revenue. It is a very large percentage and goes to show that costs are controlled. However, both their administrative and other operating expenses were rather high at 41. 13% and 25. 78% respectively. Some action should be taken against it.
Horizontal Analysis The horizontal analysis revealed some major changes as compared to FY2011. Firstly, the loss for the year had a 223. 75% reduction and this is largely attributed to the investments loss that they suffered. Secondly, the other comprehensive income for the year had almost a 9 times increase of 931. 74% and this may be due to the selling of their non-current assets. Last but not least, the total comprehensive income for the year had an increase by 75. 05% mostly due to the proceeds from the other comprehensive income.
The above ratio analysis were conducted. Firstly, in terms of liquidity, Quick ratio was compared and it revealed that the company may not be as capable as the previous year to cover current liabilities with their current assets as there is a decrease of about 6%. Secondly, as for solvency capabilities of the company, Solvency ratio and Operating Cash flows to Total Liabilities ratio were compared. Both showed an increase especially for the operating cash flow to total liabilities ratio (84. 62%) and this showed that the company is better at paying liabilities based on their total assets and operating cash flows.
Thirdly, as for the activity ratios of the company, Total asset turnover was conducted but it showed that there is a 18. 84% reduction. This may mean that the managers did not do a good job to utilize the total assets to generate revenues. Last but not least, profitability of the company is measured using the Gross Operating Profit margin. There is a slight increase of 2. 86% and it is generally a good sign as it goes to show that management is able to generate sales and yet control expenses at the same time to generate gross operating profits.
Comment on key areas which warrant attention, e. g. steadily declining margins and non-recurring gains. Some of the key areas which warrant attention are the net profit of year 2012 which shows a negative figure of 6. 8 million from the year 2011 which shows a profit of 5. 4 million. This is worrisome as the Sakae Holdings is suffering a huge loss in the year 2012.
On top of that, there is also impairment loss on investments in associates which sources 10. 4 million for the occurring loss. A non-recurring gain is the investment property from zero in the year 2011 to 1. 9 million in the year 2012. Comment on the company’s cash position, e. g. is operating cash flow sound? Based on the cash flow statement, we can see that the net cash from operating activities increases from 4. 9 million to 11. 4 million which shows the amount of cash flow that manager can control.
This is a good sign that Sakae Holdings is making money and sourcing of funds from its daily operations. A negative amount of cash flows shows using of funds while a positive amount of cash flows shows sourcing of funds. Some examples of sourcing of funds in the year 2012 are Amortisation of prepaid lease, Write-off of property, plant and equipment, Impairment loss on investments in associates, Impairment loss recognised on trade receivables, and Interest expense. Overall, there is sufficient positive free cash flow in the year 2012 which amounts to 8. 7 million to sustain its business.

Don't use plagiarized sources. Get Your Custom Essay on
Sakae Sushi financial analysis
Just from $13/Page
Order Essay
Order a unique copy of this paper
(550 words)

Approximate price: $22

Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

At Solution Essays, we are determined to deliver high-quality papers to our clients at a fair price. To ensure this happens effectively, we have developed 5 beneficial guarantees. This guarantees will ensure you enjoy using our website which is secure and easy to use.

Money-back guarantee

Most companies do not offer a money-back guarantee but with Solution Essays, it’s either a quality paper or your money back. Our customers are assured of high-quality papers and thus there are very rare cases of refund requests due to quality concern.

Read more

Zero-plagiarism guarantee

All our papers are written from scratch and according to your specific paper instructions. This minimizes any chance of plagiarism. The papers are also passed through a plagiarism-detecting software thus ruling out any chance of plagiarism.

Read more

Free-revision policy

We offer free revisions in all orders delivered as long as there is no alteration in the initial order instruction. We will revise your paper until you are fully satisfied with the order delivered to you.

Read more

Privacy policy

All data on our website is stored as per international data protection rules. This ensures that any personal data you share with us is stored safely. We never share your personal data with third parties without your consent.

Read more

Fair-cooperation guarantee

Ordering and sending money to us is an indication that you are purchasing our products and services. To have business talks laid out in the official language, you can check on our terms and conditions and get more information about this.

Read more

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
The price is based on these factors:
Academic level
Number of pages
Order your essay today and save 20% with the discount code: LEMONADEPlace Order
Live Chat+1(978) 822-0999EmailWhatsApp