Financial Statement Analysis Analysis Narrative Essay Example

shareholder’s wealth. ROE is a profitability measure which shows that the business generates money with the invested money.

The management therefore out to streamline its operations well in order to ensure future sustainability of the business. It is advisable for them to increase the share capital of the business through an issue of additional shares to the new or existing shareholders. Such action will significantly assist in the improvement of the business liquidity. They should also adjust return on sales ratio in order to help them suit with the changing economic trends. A change on the return on sales will significantly boost them in creating an effective pricing strategy for their products.

It is advisable for them to maintain an increasing inventory turnover as it indicates the business growth potential. Maintaining the inventory turnover rate at 6 for the past 4 years shows that there is no any significant growth for that period. A viable business ought to expand with time and its production and volume of sales should also increase as time goes. So since there is no any notable growth on the inventory and sales, the management should consider strengthening the marketing department in order to improve this. In their marketing strategy, they should focus on new customers and new markets if possible. Incentives such as products promotions, issue of discounts and after sales service should be used to increase the business sales volume.