Accounting Systems Financial Performance

Question: Discuss about the Accounting Systemsfor Financial Performance. Answer: Introduction:- The growth of any business firm is depended on the financial performance of the business over a particular period. The financial performances also help to ensure the continuity of the business operations. Therefore, it is very necessary to analyze the financial performances at the end of the certain period, i.e, monthly, quarterly or annually. Most of the advanced accounting software can provide necessary information, required for the financial analysis. Saasu also prepare and update such financial reports automatically with every financial transaction entry. In addition, the users can obtain many other reports from this software for measuring the performance in more effective manner (Khaneja, 2015). The report evaluates the financial performance of Streamline on the basis of the financial reports, prepared under Saasu software. It also includes various recommendations, which can improve the evaluation process and the financial performance of Streamline, as well. Analysis of Financial Performance:- The financial performance of Streamline can be evaluated in various forms. The most important aspect of any profit seeking organization is profit. Hence, the profitability ratios of Streamline for the month of February are computed below: Profitability Ratios:- Particulars Amount Total Revenue $41,337.10 Gross Profit $18,488.10 Net Profit $7,776.74 Owner's Contribution $60,000.00 Gross Profit Margin 44.73% Net Profit Margin 18.81% Return on Equity 12.96% The table depicts that Streamline has performed quite well in the period. It has converted almost 44.73% of its sales revenue into gross profit and turned 18.81% into net profit. The owner has been able to earn 12.96% return on the initial contribution. From general perspective, such performance is very satisfactory (Kaplan Atkinson, 2015). The other ratios, which can help Streamline to measure the efficiency level of its operation level, are calculated below: Efficiency Ratios:- Particulars Amount Total Revenue $41,337.10 Accounts Receivable $15,908.75 Cost of Sales $22,849.00 Inventory $8,867.00 Accounts Payable $26,400.00 Accounts Receivable Turnover Period 140.47 Inventory Turnover Period 141.65 Accounts Payable Turnover Period 303.82 Though the credit periods for accounts receivable and accounts payable are 30 days after sales and 30 days after the end of the month of purchase respectively, the average period for collecting credit sales and paying off credit purchases are 140.47 days and 303.82 respectively. The company uses to convert the inventories into sold products in 141.65 days approximately (DRURY, 2013). Strategies for Improvement in Operation:- Streamline has generated satisfactory profit margins in the current month. However, it can increase its profit margins and improve its efficiency level further by implementing the following strategies: The company should reduce the accounts receivable turnover period for increasing its cash inflows faster than the current scenario. It should convert its inventories into sold products more quickly than the present turnover period. The company should charge depreciation on its fixed assets. It will not only help the firm to increase the profit margins but also in accumulating the replacement costs of the fixed assets in future. As many of the creditors are paid before the due date, the company may ask for discount on the early payments. It can help the firm to earn more profits. The company may also maintain provisions for bad debts, so that, it can reduce the risk of any doubtful debts (Saunders Cornett, 2014). Conclusion:- Streamline has analyzed its financial performances on the basis of general financial reports. However, Saasu has many additional reporting facilities, which can be very beneficial for business decision-making. As Streamline uses Saasu software for recording its financial transactions, it may utilize the additional benefits of Saasu. The following reports, provided by Saasu, can be very helpful for Streamline: Aged Receivables Aged Payables Report: These reports can help the firm to estimate the cash inflows and cash outflows in the following period. The firm can determine in which cases, it has failed to collect or pay the dues within the due period. Forecasted Cash Flow: The forecasted cash flow can help the firm to determine the amount of cash revenues and cash expenses in the next period. Based on the forecast report, the company can take necessary business decisions accordingly (Hossack, 2015). BAS Summary: Bas summary is very effective for computing the tax expenses of the company based on the financial activities of a certain period (Schuh, 2014). Streamline can make its business decisions more effective by incorporating these reports along with the general financial statements. References:- DRURY, C. M. (2013).Management and cost accounting. Springer Hossack, S. (2015). Cloud-based accounting and productivity tools for practitioners and taxpayers.Taxation in Australia,50(5), 265 Kaplan, R. S., Atkinson, A. A. (2015).Advanced management accounting. PHI Learning Khaneja, S. (2015). E-Accounting in the Current Scenario: Impact of Information Technology.The International Journal of Business Management,3(9), 290 Saunders, A., Cornett, M. M. (2014).Financial institutions management. McGraw-Hill Education,. Schuh, G. (2014). ERP Enterprise Resource Planning. InCIRP Encyclopedia of Production Engineering(pp. 472-478). Springer Berlin Heidelberg