Smallwood’s net profit in 2005 was £22,000 but then it had decreased by £2,000 to £20,000 in 2006. However, in 2007 the net profit had increased by £4,000 to £24,000 in 2007, but this is an issue as the net profit should be larger than the total expenditure, and that’s the amount of money which is available to spend. The percentage of the net profit in 2005 was at 3.2% of revenue which either got disturbed to the company or investors. In 2006 the % dropped to 2.8% and then in 2007 it increased again to 3.6%. This is still an issue as in 2006 there was less money to distribute to the investors or the company but had come 2007 there was more then there has been in 2005 and 2006 to distribute out.
Smallwood’s debtors in 2005 owed the company £75,000. However, this has decreased by £2,000 to £73,000 owed to the company in 2006, which shows that pavements were being made on time to the company. Although the amount owed in 2007 by the debtors had increased by £10,000 to £83,000, which was an issue as in 2007 the company wasn’t getting pavements as quickly as they did the previous two years. In 2005 it took 40 days to pay and £75,000 was owed to the company. In 2006 the days had decreased to 38 days with only £73,000 being owned, but then in 2007 rapidly the days had increased to 45 days and £83,000 being owed.
Smallwood’s interest in 2005 was £46,000 and then it went up by £8,000 in 2006 to £54,000. Also in 2007 this number had increased to £61,000 by £7,000. This was an issue as the company was paying more interest each year and that looks bad on the company. This could have occurred as maybe the company had been behind on loan repayment or the APR% had increased. Moving onto the interest ration cover in 2005 the ratio was 1.5% and in 2006 it decreased to 1.3%. However, in 2007 it went up to 1.4% and this is an issue because the decrease in 2006 and 2007 meant that the company had less money to cover interest payments and that means that they have less money to...