Billabong Monetary Review Composition

Billabong Financial Review over 2012 & 2013

A. Current Ratio

Part 1:

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Current ratio sama dengan Current assets


Current liabilities

2012 Current ratio = 898. 92


611. forty-four

= $1. 47

2013 Current percentage = 622. 37


612. 50

= $1. 02

Part a couple of:

The current rate is a way of measuring a business' liquidity, worked out by taking total current resources and dividing by total current debts. The 2013 current ratio for Billabong has dropped $0. forty five since 2012. It is generally unwise for a business to let their current ratio to fall below 1 . 5: 1 in order to ensure you will discover sufficient assets to spend current liabilities or responsibilities. In 2013, Billabong's current ratio was obviously a low 1 ) 02, suggesting a deteriorating liquidity situation of the business - which means the business can be not able to shell out its financial obligations and may be required to raise extra finance or perhaps extend time it takes to pay lenders. Comparing 2013 to 2012, the company current property have lowered while the current liabilities have got increased. If perhaps this routine continues, an up-to-date ratio under 1: 0 would reveal a negative seed money. Billabong may have to sell noncurrent or unproductive assets to hide liabilities - reducing it is capacity to gain profits, or perhaps, borrow financial situation in the short term and face high interest payments. If they will choose to borrow finances, lenders may look at the current ratio as a measure of the ability of the business to service the debt. Billabong's current ratio will be looked upon unfavourably in this scenario. The business should view improving their fluidity as a activity of high importance if they would like to continue working. 


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N. Debt to Equity Ratio

Part 1:

Debt to equity rate = Total liabilities


Owner's equity

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2012 Debt to equity rate = 1051. 30


1028. 57

sama dengan $1. 02

= 102. 21%

2013 Debt to equity proportion = 702. 46


316. 83

= $2. 22

= 221. 72%

Part 2:

The debt to fairness ratio procedures what amount of fairness and financial debt the business is definitely using to finance its assets. In 2012, Billabong's debt to equity rate was a audio 1 . 02: 1, proving the fact that the business was in a safe budget with $1. 02 in liabilities for every $1 of owners equity. Nevertheless , in 2013, the percentage more than doubled to a concern 2 . 22, with a decrease in total financial obligations and a dramatic reduction in owner's equity. As the company uses more debt than equity, Billabong carry more risk with regards to longer term economic stability and control. Lenders and buyers would be significantly less attracted to an increased debt to equity ratio such as this since it is an indication of economic risk and possible business decline. In cases like this it is very clear that the cost of debt funding has outweighed the return that the company generates for the debt through investment and business activities - turning out to be far too very much for the company to handle. Billabong must check out its financial statements even more carefully and compare financial performance and strategies to that of similar companies in the industry. In the event the business simply cannot handle its interest monthly payments, cannot shell out its bills and simply cannot secure a stronger earnings, it may be pressured into personal bankruptcy - going out of owners and shareholders with nothing.

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C. Return upon Equity Rate

Part one particular:

Return about equity ratio = Net profit


Total equity

2012 Return upon equity proportion = —275. 65


1028. 57

sama dengan —$0. 28

= —26. 8%

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2013 Return in equity proportion = —859. 54


316. 83

sama dengan —$2. 71

= —271. 29%

Portion 2:

The return in equity percentage measures a business' success by uncovering how much earnings a company produces with the cash shareholders include invested, and subsequently just how much net income is usually returned to investors. Applying this ratio we can see that Billabong has an total negative income, and in 2013 a proportion of —271. 29%, above ten occasions lower than 2012. This bad return upon equity implies that the company is definitely not successful at all, and the shareholders...



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