Financial Performance of Leggett Platt, Incorporated Essay

Essays on Financial Performance of Leggett Platt, Incorporated Essay The paper "Financial Performance of Leggett Platt, Incorporated" is an outstanding example of an essay on finance and accounting.   The cost-volume-profits analysis in this paper will involve the financial performance of Leggett Platt, Incorporated. The furniture manufacturing company has recorded poor performance in 2011 compared to 2010. However, the company remained in good financial health because it had a current ratio of 2.09 and an acid ratio of 1.16. The firm is also profitable as indicated by its 0.19 ratio and 0.28 ratio as returns on assets. This shows how the firm has managed to efficiently manage its assets. In terms of leverage, Leggett Platt, Incorporated has a strong equity position because it uses less leverage. The firm has also recorded a high inventory turnover as indicated by a ratio of 8.24. The firm should consider improving its profits margin by reducing its expenses and increasing its sales revenue. It should consider making improvements to the collectio n of its accounts receivables because it has a very low ratio of 1.17. The computations of the ratio figures are listed in the appendix.   The furniture manufacturing firm has costs in terms of fixed, variable and mixed costs. The fixed costs may include land for factory, buildings, machinery equipment and office equipment, Variable costs may include materials, labor, office supplies and fuel for the factory. Mixed costs include the combination of labor with land for the factory. In my opinion, the standard version single is the most appropriate for the furniture business. This is because the costing method enables such a business to establish deviations in costs from the standard costs during the production process (American Institute of Certified Public Accountants, 2007). Ratio analysis is of importance to any business because it can be used in detecting fraud through the computation of variance in transactions. The variance is then used in calculating ratios for specific numbers. Some of the ratios commonly used in detecting fraud include maximum/minimum ratio, maximum/2nd highest and field 1/field 2 (American Ins titute of Certified Public Accountants, 2007). The detection of fraud aids the business in developing ethic standards for its employees hence maintaining high levels of good behavior.