Presenting to Stakeholders
The best way to present the information to the stakeholders is by giving information about the performance record. The stakeholders need to know the future expectations. Significant financial ratios will promotion in shaping the information requested. The stakeholders should receive an explanation about the different key ratios.
Liquid ratios measure the company’s capability to meet cash requirements as the needs arise. The current ratio measures the ability of the company to pay debts. REC has ...view middle of the document...
The stakeholders need to know about the risk inherited. The activity ratios show the liquidity of assets and the efficiency of managing assets. The accounts payable turnover has increased seven times from the previous year. This could mean the company is taking longer to repay the company vendors. The inventory turnover is slightly up from last year at .25. This could indicate an increase in sale of the products. By showing the leverage ratios to the stakeholders, the company could explain the company’s ability to cover interest, debt relative to equity, and other fixed charges. The cash interest has improved from operations. The fixed coverage ratio also can be important when companies have operating leases.
Last, the stakeholders should be informed about the company’s competitive position. Profitability ratios could be used to show the stakeholders the performance of the firm. Profitability ratios could showcase the efficiency in managing assets, equity, and liabilities. The ratios used will be the operating profit margin, gross profit margin, and net profit margin. All of these ratios have improved for the company. Highlighting the good points of the company at the end of the presentation will leave the stakeholders focused on the positives.