Table of Contents
Nexton is a well reputed business and perform better in last decay. But when we compare the performance of 2017 and 2018, company’s profit declined. It indicates that company’s sales are falling and there trading and operative expenses are increasing. If company control it costs in budget. Then it will not face not face any sort of cashflow problem in future. Moreover, its financial activities will be more planned in future and it can easily predict. Its income and expenditure and revenue using data from previous activities and can prepare future trends easily. This will also help Nexton to prepare reliable budget and can afford to put development of existing of new products, controlling budget will also reduce the wastes and damages. With all above, a company can improve its performance. Managing resources is also important because. This will increase business performance and motivate staff. Nexton is a manufacturing dental and medical equipment, and the physical resources as company is using are its equipment’s and tools. If staff manage this equipment properly, check in routine give time for maintenance and keep them up to date then production process will go smoothly.
A company may require of feel problems, when giving training to it’s workers, because it takes time and put extra cost of training but this will increase workers efficiency and reduce the maintenance cost of equipment. Human resources need to control effectively because if workers are well motivated, takes, interest in their work. Then Nexton takes advantages of this. Absenteeism rate and labor turnover will reduce and chance of wastage will also reduce. Although this motivation of workers bear cost by Nexton, because company must pay them more and gives some non-financial incentives to. Nexton needs to manage its technological resources aswell, because by the use of latest technology, employees feel more of an comfortable and relax in their job and give their maximum ability to business. This will bear cost by Nexton to provide these equipment’s but workers efficiency will increase at the end the most important factor for Nexton is to motivate its employees well to get best performance.
Conclusion
Accounting ratios are very important to monitor the state of the business and business performance can be judged easily. These ratios can judge the performance of a business in previous year as compare to current year. Profitability ratio tell business ability to can profit in a given time period. The gross profit ratio has decreased in 2018 as compare to 2017, because of decline in sales. So Nexton needs to address the reason behind this trend. Net profit ratio has also decrease because of less sales and more operating expenses. Current ratio is positive in 2018 as compare to 2017. The standard ratio is 2:1 it also means that company is not utilizing its resources properly. It needs to consider current ratio. Acid test ratio is also positive even after. This current asset is most risky to liquidate other efficiency rates can also be used to judge the business performance.
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