Analysis on the profitability, Financial Accounting

(a) You are working as the CFO of Jeans Co. The company is currently seeking a new supplier for their goods. There are two main suppliers of choice, XYZ Ltd and ABC Ltd. The contract would be worth over $2 million in sales per annum to the successful supplier. You also own a large majority of the shares as shareholder in

XYZ Ltd. The directors have asked you for a recommendation.

Required:

Discuss the ethical issues involved in this situation.

What would be the best course of action by you as manager?

(a) Comment on the following three (3) ratios and provide analysis on the profitability, asset efficiency and liquidity of the entity:

Ratio	2013	2012
Profit Margin	9%	12%
Days Inventory	100	70
Days Debtors outstanding	65	45
Current Ratio	2.7:1	1.9:1

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