how does managing ethically and responsibly impact on the leadership styles of senior managers?
... (before interest and tax) that have been generated from sales have decreased from 36.53% to 31.77%. Selling, General& Administrative expense Ratio increase from 8.89% in 2002 to 12.25% in 2003. That means management do not appear to have controlled the selling, make a distribution expense very well, especially since sales have dropped. Possible reasons for increase in these expenses may be sales wages having increase, delivery charges by the courier company may be increased or more money may have been spent on advertising. Quality of Income Ratio has increased from254.83 cents in 2002 to 274.40 cents in 2003. This essentially means that management are as efficient in 2003 as in 2002 in converting their profits into cash flows. Possible reasons may be that credit customers are taking shorter to pay their bills; less credit sales may have been made in 2003, which will not be collected till 2004. It could also mean that more money is tied up in unsold inventories or that more prepayments were made in 2003. ƒÜ Stability Short-term liquidity Current ratio has increased from 0.89:1 in 2002 to 0.93:1 in 2003. This means that in 2002 SANTO Ltd. had $0.89 in current assets for every $1.00 of current liabilities, which arised slightly to $0.93 of current assets. In spite of the increase, current claims appear to be still not being covered. The quick asset ratio indicates that in 2002 SANTO Ltd had $0.68 cents in quick assets to cover every $1.00 of quick liabilities. This decreased to $0.67 in quick assets for every $1.00 of quick liabilities. This decrease appears to be partly due to the increase in the number of days it is taking SANTO Ltd to collect money from its accounts receivable. The deterioration in the quick asset ratio could signal possible liquidity problems. In 2002 for every $1.00 of liabilities, 138.56 cents has been generated in cash flows from operations: in 2003 203.56 cents has been generated in cash flows from operations. Cash flow ratio has increased very significantly from 138.56% in 2002 to 203.56% in 2003. As both measures are more than 1.00 it indicates a light reliance on cash flow from sources other than normal operations to meet short-term debt. Long-term solvency Debt to assets ratio shows that in 2002, 46.18% of total funds were provided by creditors. This figure dropped to 40.83% in 2003. This means that there is less reliance on external debt to finance the assets of the business in 2003. The Debt to equity ratio also confirms this. In 2002, for every $1.00 of owners¡¦ equity, $0.86 was obtained from creditors where as in 2003 it dropped quite dramatically to $0.69. This is also evident in actual dollars from the balance sheet which shows that Total Liabilities have dropped from $2456.9 million to $2130.4 million, a drop of 13.3%. As reliance on external debt finance has diminished, so too has total interest owing decreased. This is evident from the Times interest earned ratio which shows that in 2002 interest charges were covered 11.56 times. This increased to 13.45 times in 2003. Efficiency Inventory turnover for 2002 is 52 days compared with 42 days in 2003. This means that it is taking 10 days shorter in 2002 to turn the inventory over. This may signal good inventory management, but it may also indicate inadequate stock levels, causing lost sales and excessive restocking costs. Accounts receivable turnover has improved from approx. 69 days to approx. 43 days. In other words, in 2003 it took 43 days to collect money from the credit customers, whilst in 2002 it took 69 days. Without knowing the ¡¥normal¡¦ credit terms allowed by SANTO Ltd. it is difficult to say whether these calculations are extremely good or moderately good. It depend on how and days does normal credit terms. Accounts payable turnover has decreased from 135 days to 109 days. This means that it is taking shorter for SANTO Ltd. to pay their bills. This appears to have decreased like their operating cycle has; that is the average length of time it takes to acquire inventory, sell the inventory to customers and ultimately collect cash from the sale. Whether 135 or 109 days are good or bad, would have to compared with the normal credit terms that have been negotiated with SANTO¡¦s supplier. Per-share performance Earnings per share have increased from $0.55 per share in 2002 to $0.56 per share in 2003. This can be compared with the share price, which was $6.02 in 2002 and $6.87 in 2003. Where as earnings reflect the past performance of the organization, its share price should reflect it expected future performance. This means that confidence in the company has rised as reflected by the rise in the sha...