- 15 Marks
MA – L2 – Q72 – Performance Analysis
Analyze Nexus Enterprises' financial performance using ratios and metrics for Years 1, 3, and 4 (forecast).
Question
The financial performance of Nexus Enterprises is summarised below. ‘Now’ is the end of Year 3.
| Year 1 | Year 3 | Year 4 (forecast) | |
|---|---|---|---|
| Cost of sales/Sales | 63% | 70% | 70% |
| Marketing costs/sales | 9% | 6% | 5% |
| Distribution costs/sales | 13% | 8% | 6% |
| Administration costs/sales | 2% | 2% | 2% |
| Interest charges/Sales | 0% | 4% | 8% |
| Operating profit/sales | 13% | 10% | 9% |
| Loans/Sales revenue | 0% | 50% | 67% |
| Inventory/Sales | 10% | 14% | 18% |
| Sales/Non-current assets | 4.7 times | 1.9 times | 1.2 times |
| Average sales per employee | 600,000 | 1,032,000 | 686,000,000 |
| Average sales per product | 281,000 | 185,000 | 234,000 |
| Average sales per supplier | 750,000 | 726,000 | 651,000 |
Required:
Use this information to evaluate the financial performance of Nexus Enterprises.
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