Accounting project

Case study model 3

This data extracted from the books of Al-Hoshan industrial company:

Description (X) Section (Y) Section Total

Gross profit 29,000 17,000 46,000

Direct materials 5,000 4,000 9,000

Direct labor 7,000 8,000 15,000

Rent 2,000 4,000 6,000

Advertising 2,000 6,000 8,000

Others 4,000 3,000 7,000

Total 20,000 25,000 45,000

Net profit(loss) 9,000 8,000- 1,000

Cash at bank 50,000

Sales 60,000

Suppliers 30,000

Customers 25,000

Capital 30,000

Q1: The company is studying the proposal to dispense with section (Y), If you knows that the facility doesn't want to dispense with the location of section (Y),

and $1000 of advertising costs peraining to the facility as a whole, and other expenses of $1000 that serve the general purpose of the facility.

Would you recommend closing this section?

Q2: Extract the following indicators from the previous data, showing an analysis of the results of each indicator:

Liquidity ratio

Return on sales percentage

Average debt collection period

Q3: Based on the information on the feasibility study of this project, the owners of the company want to achieve a profit margin on their capital of at least 25% annually.

Do you find that the financial results of the project are satisfactory to them? and what are the tips you advise to manage the company in order to achieve what the owners of the company wish?