6. CONCLUSIONS AND RECCOMENDATIONS
The gearing ratio of the company has risen to 3.41% compared with the previous year and thus business of the company became slightly unstable. Though, the result of ROE is more significant this year, meaning that investors are eligible to receive higher return on equity. Maybe, this is a result of uncertainty which provokes the speculation among investors and the slight increase in market share price which is generally has bad performance (see section 3). However, MFI is trying to sustain image by offering satisfactory covered dividend for the year 2003 which results in 3.9 and is satisfactory, i.e. MFI is able to pay out dividends to shareholders after after-profit tax. The debitors days are the same as last years, though there is a 12 days decrease in creditor days which is welcomed as a simplification of accounts to be paid, though can be not satisfactory for the management due to the period of realisation of goods became smaller. Author had also notified an increase in quick ratio compared with the last year’s results, and a decrease in stock turnover, probably, due to expenses on fixed assets, which can be notified as a withdrawal of resources from cash flow.
The recommendation of the author is to try to decrease debitors days during the next year by careful and thorough negotiation with partners. This action will prevent from the insufficiency of cash flow. In authors opinion the attraction of additional operating resources and a cost decrease can help the company to perform better in the future. Several possibilities can be chosen, for example:
• Try to implement efficient cost management and operate with the resources available
• Having a well-defined strategy issue bonds to attract additional investors via stock exchange
• Having a well-defined strategy provide a credit line for internal development
Management accounting can be useful because management accounting is concerned with financial duties within the company to allow manager to control the situation within the company by knowing the aspects of product costing, planning and control of goods and capital, thus from the perceived information it is possible to summarize the overall situation and make concrete decision which will be a benefit for the MFI.
…
