Sunday, February 24, 2019
Research Success Assignment Essay
Leons furniture is graded number two hundred and ten on the globe and accoutermentss report on line of descent top 1000, earning a dismisswork of $56,666. The focus of this report allow for be on the fiscal smudge of Leons furniture. For any business, the monetary coif of the caller-out pass oning be viewed by both internal and external users and s crapholders because it shows how well the business is doing financially. The net in descend of the caller-up will affect the financial position of the business because establish on the profit or loss incurred, it will define if the business is successful or not. Moreover, shargonholders will be interested in the financial statements since it determines the earnings per sh atomic number 18. The first term is Leons EPS falls 18.8% in Q2 which reports nearly the financial situation of Leons and briefly explained the causes of the fall. Judging from the title of the article, it is lucid that it will impact Leons furniture in a banish fashion.Sales are returnd from $11.2 million to $9 million amid 2011 and 2012 (Knell). This suggests that net income and earnings per share has dropped signifi flowerpottly. It is reported that the decrease in gross revenue is due to the continuation of waning customer confidence, decrease in trapping suffers, and continued high customer debt (Knell). Customer confidence plays a considerable part when customers are debating on whether they should purchase the furniture or not. Since the creative activity is still recovering from the economic crisis years ago, the higher unemployment rates and level GDPs will create less customer confidence when a finale needs to be made. Hence, they are less likely to purchase the products. The cash in singles chips of a decrease in housing convey that less houses are being built compared to before.Moreover, less new home owners will fink at furniture stores like Leons furniture. In addition, high consumer debt like a shot is another reason why theres a diminution in customer spending. Also, affecting probability in the second ninny were marketing expenses. (Knell) Since Leons have been opening new stores, the occupancy cost are outgrowthd by $1.2 million. These increases and decreases in numbers will ultimately reduce the sales volume and result in a decrease in net income. Leons earning decline 15% in triad quarter is another article that reports a contradict impact relating to their financial position. Similar to the earnings declined in the second quarter, the third quarter of the year is still a tough period for Leons. They claim that this is due to the increase in operate costs in a time of at once sales growth (Knell). The newly renovated stores in Sault. Ste. Marie and Sudbury, Ontario are opened in the third quarter of 2012 and will further increase the operating cost.Financially, this nub that Leons is continuing to expand and opening new store and increase its operating expenses, but the market is only providing them will a flat tire growth rate of sales. If the sales volume remains unchanged and operating costs continues to grow, the amount of the money earned will logically start to decrease. The company said its growth margin fell 1.5 points to 40.9% mainly because a weakening Canadian dollar hiked the cost of imported product (Knell). This means that more Canadian dollars are necessary to buy the foreign products that employ less Canadian dollars to buy years ago. This effects the financial position because more assets are used to import foreign products. Lastly, the third article is called Leons to acquire The Brick. As the title suggests Leons will buyout The Brick and will merge the two companies in one. This butt have both confirmative and negative impacts for Leons financially.The transaction, valued at about C$700 million, is judge to close in the first quarter. (Knell) This can be considered a negative impact for the company financially since an enormous amount of money is needed for the buyout. Using large amount of money to buy out The Brick can affect several things. The asset will decrease (if they borough money from banks, it will increase their liabilities and they must pay for the interest) and also effect the asset-liability ratio, making the company owe more than they own. In addition, the executive chairman of The Brick is anticipated to link up Leons board of directors (Knell). Like any other new coworkers that come to the company, they might encounter arguments or disagreements. However, if both companies work together in a commanding manner, they may earn more net income combined.Hence, this will turn the negative into a positive impact for both companies. Leons corporeal and franchise stores had combined sales of C$879.6 million and The Brick had corporate and franchise sales of C1.54 billion (Knell). This shows that the sales volume of The Brick is actually great than its new owner, Leons. This can impac t Leons in a positive way because the revenue from The Brick will be added onto their own revenue since they are now a combined company.The most important thing to take into consideration is that buying out The Brick, Leons will have one less competitor in the furniture industry. All of the above will lead to increase in total revenue and net income for Leons furniture. Since I am currently studying Accounting and Finance at Seneca College, I believe that my future profession in accounting can help Leons keep track of their transactions and create veracious and reliable financial statements. These statements will show all the inflow and outpouring of capitals going in and out of the company. By looking at the financial statements, I can then analyze on how to make the company more profitable using the accounting skills that I am encyclopaedism at school.