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(d) The Managing Director who is not very familiar with the financial items, somehow find it difficult to interpret the performances of the company's results,
(d) The Managing Director who is not very familiar with the financial items, somehow find it difficult to interpret the performances of the company's results, in terms of status of assets and liabilities, and wonder building up a system using financial ratios and budgets possible. You are required to (i) (ii) Advise the managing director on the reliance of using financial ratios analysis and budgetary controls for measuring the performances of the company. Highlights to managing director any limitations or drawbacks of these financial tools. Critically analyse how you believe building up a proper management accounting function and budgetary controls are good for the company in the long run. All relevant assumptions and calculations should be included in the report (or as an appendix to it (d) The Managing Director who is not very familiar with the financial items, somehow find it difficult to interpret the performances of the company's results, in terms of status of assets and liabilities, and wonder building up a system using financial ratios and budgets possible. You are required to (i) (ii) Advise the managing director on the reliance of using financial ratios analysis and budgetary controls for measuring the performances of the company. Highlights to managing director any limitations or drawbacks of these financial tools. Critically analyse how you believe building up a proper management accounting function and budgetary controls are good for the company in the long run. All relevant assumptions and calculations should be included in the report (or as an appendix to it Alpha Corporation is a manufacturing company located in country where the available of the raw materials and labor are readily available. The company has undergone expansion over the years, which has reported substantiable return measured in net profit to its shareholders. The company has three major operating divisions, and the results for the three divisions were summarized as follows. Alpha Corporation Product operating Line Income Statement For the Year Ended 31 December, 2018 Descriptions Vacuum Cleaner Water Dispenser Coffee Maker Total 3 Products Sales $110,000 $200,000 $90,000 $400,000 1 Traceable costs Direct Material ($50,000) ($80,000) ($60,000) ($190,000) Direct Labour ($20,000) ($14,000) ($10,000) ($44,000) Direct Overhead ($11,000) ($5,000) ($5,000) ($21,000) Non-traceable costs Common Fixed Costs ($24,000) ($40,000) ($16,000) Division Net Income $5,000 $61,000 ($1,000) ($80,000) $65,000 The company's summarized balance sheet for the current year and last year were tabulated as follows: Net fixed assets 31.Dec.2018 $'000 31.Dec.2017 $'000 $'000 $'000 Current assets 60.0 55.0 30.0 25.0 Current liabilities 20.0 30.0 Net current assets 10.0 -5.0 70.0 50.0 Loan capital 20.0 20.0 50.0 30.0 Share capital 10.0 10.0 40.0 20.0 Reserves
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