Accounting and Finance report, assessing the possible investement in an organisation.
the one year period. However without seeing previous years records only a limited judgment can be made simply because 2002 could simply have been a one off poor year.
I believe by investing in longway, it would make good marketing sense because a greater proportion of the market would be acquired but I don’t believe there is any significant financial logic behind the investment based on the profitability ratios. However its unfair to make assumptions about profitability because the remainder of the market needs to be considered, furthermore do past records of performance. I don’t believe that records of just two years can justify a clear decision about investment. Liquidity does show that the company could in fact survive but I don’t feel as though the profitability margins are great enough to make such an investment as they show huge decreases between 2001-2002. The reasons why the profitability has dropped need to be considered and the external factors need to be explored before fully justifying this decison