Tuesday, May 17, 2011

UDOSO

                       WHY UDOSO FAIL TO FULFIL ITS OBJECTIVES?
    Leadership is a social process in which the leader seeks voluntary participation of subordinates in an effort to reach organizational objectives, voluntary is the key word.
          UDOSO is an organization approved by the UDOM council as being an organization representatives of students of university as established under article 25of the university of Dodoma charter and universities act. No 7 of 2007.according to the UDOSO constitution the objectives of UDOSO includes,to protect and promote student interests in all aspects of their lives during their tenure at the university of Dodoma, to establish a proper organization for communication between the university authorities and the students, to maintain and promote fraternal relations with other students of higher learning institutions in Tanzania, Africa and world wide, to maintain harmonious relations between students and academic and non academic members of staff;the university administration and the university community in general,act as intermediary between the students and the university administration,
              UDOSO governments do fail to fulfill the above objectives as well as other unmentioned objectives due to the following reasons;-
               Lack of power, power is the ability to Marshall human, information and material resources to get something done, you (leader) need authority to do so, power is demonstrated ability to get results, authority without power is the right to but no ability to get subordinates to do something, power without authority is the ability but no right to get other people to do things, power and authority are inseparable, our leaders have authority but most of them are powerless.
              During the election campaign their promises were not SMART (Specific, Measurable, Attainable, Realistic, Time measured) every one assures voters that he is going to bring changes.changes !changes! changes! changes !but which changes?, how to bring those changes?why changes?and when those changes will come? Are the question to be asked. Can they bring changes while we know their strength is at minima,and their weakness is at maxima? You cant bring changes while you need to retain your millions you invested in the campaign, you appoint the whole of your campaign team as ministers.
               “espirit de corps”in an organization there is strengh with the principle of unit of command, emphasizing a team work and the importance of communication, UDOSO government do not work as a team work. Why no team work the answer can be traced back during their election campaign they have their own lineup arranged from presidential/chairperson level to the representatives, they think all the team can enter into power! But due to wise selection it reaches a point a chairperson, vice chairperson, and representatives come from different teams, each team has its strategies,and opinions. This difference which exist among them make them not to act in a team work.
              Lack of proper coordination, there is no proper coordination in three parts,namely UDOSO,Management,and students each side instead of constructing the bridge, they keep attention on building the wall. The way in which these three parts function is like the wall, the nail,and the harmer.
             Friction, in order something to move there must be friction between the parts there no enough friction between students and UDOSO, UDOSO and management, lacking of friction result to the objectives not to fulfilled as they know they can make any embezzlement and no action can be taken.  
           THINK ABOUT OTHER REASONS.(SMS/CALL 0759283880)                            

account

      ASSIGNMENT 2   AF 101.
The final accounts of hope ltd.for the year 2007/2008 are given below;-

Balance sheet as at                                           30th June 2008                       30th June 2009
                                                                                 Shs                                      Shs             

CAPITAL EMPLOYED
Ordinary share capital @ shs 10                      787,500                       787,500   
Profit and loss account                                       65,100                         53,200
     Debentures                                                  549,500                        630,000
     Bank loans                                                  238,000                         459,000
                                                                       1,640,100                     1,930,000

FINANCING  
Non current assets.
       Plant & machinery                                  2,100,000                     2,273,600
 Less accumulated depreciation                    (1,680,000)                 ( 1,921,500)
                                                                           420,000                       352,100
Investments                                                        197,400                          92,400
                                                                          617,400                         444,500
Current assets
        Stock                                                         966,000                      1,356,600
        Debtors                                                      808,500                      1,417,500
        Cash                                                        1,813,800                      2,843,400

Less ;current liabilities
         Creditors                                                  407,400                          819,000
         Accruals                                                   105,000                          352,000
          Taxation                                                  134,400                            81,200
           Dividends                                               143,500                          105,300
                                                                          790,300                       1,357,200
                                                                                          1,022,700                     1,486,100
                                                                                          1,640,100                      1,930,600

Profit and loss account for the year ended      30th June 2008               30th June 2009
                                                                                Shs                                Shs
Sales                                                               5,904,500                        7,809,900
Less cost of sales                                           3,675,000                        4,704,000
  Gross profit                                                 2,229,500                         3,105,900

Less expenses
  Administration expenses      1,494,500                        2,394,000
  Rent                                         129,500                           144,900
Interest                                        91,000                            151,200
Depreciation                              210,000    1,925,000       241,500         2,931,600
Pre tax profit                                                 304,500                                 174,300
Less; taxation           134,400                                                       81,200
         Dividend          143,500                   277,900                    105,000              186,200  
          Retained profit                                  26,600                                                 11,900  
            
Market price per share                                                         shs    45             shs         55



Required
          Calculate the following ratios for each for 2007/2008   and     2008/2009
a)         i) Liquidity ratios
ii)performance ratios
iii)Gearing ratios
iv)Earning ratios
                                           
b)        state the possible reasons for and significance of any change in the ratios shown by your calculations.





























  SOLUTION;
(a) i)LIQUIDITY RATIOS

  (i)Current ratio;                                                            2007/2008                  2008/2009

               Current assets                                              1,813,000                        2,843,400
              Current liabilities                                            790,300                        1,357,200
                                                                                        =2.3:1                        =2.1:1
.
               
  (ii)Quick ratio;                                                      2007/2008                    2008/2009
                  Current assets-stock               1,813,000-966,000          2,843,400-1,356,600
                    Current liabilities                         790,300                            1,357,200                                                                                                            =1.07:1                          1.09:1
      
                              
(iii) Debtors collection period(average debtor collection period)
                                                               2007/2008                           2008/2009
average debtors x 365      debtors at start not available   (808,500 +1,417,500)÷2x 365
  Credit sales                                                                                        7,809,900
                                                                                                              52days
           -unable to calculate or show changes due to un availability of data
                                                                                

(iv)Average credit period taken(creditors to purchases ratio)
                                                            2007/2008                                 2008/2009
     Average credits   x 365 creditors at start not available  (407,400+819,000)÷2 x 365
       Credit purchases                                                                        5,094,600
                                                                                                             44 days


      -un able to calculate or show changes due to un availability of some data in 2007/2008













ii)PERFOMANCE RATIOS

                                                                         2007/2008                        2008/2009
(a)Gross profit margin
    Gross profit  x 100                                         2,229,500 x 100             3,105,900 x 100
            Sales                                                       5,904,500                       7,805,900
                                                                               = 37.8%                       =39.8%
                                                                                                                                                                                                                 
                                                   
(b)Net profit margin                                       2007/2008                            2008/2009
      Net profit  x 100                                      170,100     x 100                    93,100    x 100
          Sales                                                     5,904,500                              7,809,900
                                                                           =2.9%                                  =1.2%


(c)Stock turn over rate                                   2007/2008                          2008/2009
     Cost of goods sold                                      3,675,000                            4,704,000
        Average stock                                           966,000                  (966,000+1356600) ÷2
                                                                      =3.80times                        =4.05time.

         
(d)Return on investment                               2007/2008                         2008/2009
    Net profit before tax x100                        304,500  x100                    174,300    x 100
         Total assets                                         2,430,400                            3287900
                                                                          12.53%                             5.30%

(e)Return on capital employed                          2007/2008                2008/2009
  Net profit before interest and tax  x 100         395,000  x 100            325,500   x 100
       Capital employed                                      1,640,100                    1,930,600
                                                                           =24.08%                         =16.86%

      
(f)Fixed assets turnover                                 2007/2008                      2008/2009
   Sales                                                           5,904,500                        7,809,900
 Fixed assets                                                    420,000                           352,100
                                                                      = 14.05times                   = 22.18times
.                                                                     

     (g)Current assets turnover                          2007/2008                      2008/2009
         Sales                                                      5,904,500                          7,809,900
     Current assets                                           1,813,000                          2,843,400
                                                                       =3.3 times                          = 2.8 times                                     
                         



(h)Total assets turnover                                2007/2008                       2008/2009
   Sales                                                        5,904,500                           7,809,900
Total assets                                                 2,430,400                           3,287,900
                                                                      =2.43 times                        =2.38 times
    
                                                             
(i)Stock holding period                              2007/2008              2008/2009
   Average stock  x 365                              966,000 x365      (966,000+1,356,600)÷2 x365
Cost of sales                                               3,675,000                  4,704,000
                                                                      =96 days                    =90days                                                              
.

iii) GEARING RATIOS
  (a)Debt ratio                                                      2007/2008                       2008/2009
 Long term liabilities x100                               787,500 x100                   1,089,000 x 100
  Total assets                                                     2,430,400                          3,287,900
                                                                          =32.40%                                    = 33.12%
                                                
  (b)Debt for equity ratio                              2007/2008                                 2008/2009
Long term liability                                           787,500                                   1,089,000
    Equity                                                             852,600                                    840,700
          
                                                                            =0.91:1                                           = 1.3:1

                                                                                              
(c)Equity ratio                                               2007/2008                        2008/2009
   Equity  x 100                                            852,600  x 100                 1,089,000  x 100
Total assets                                                   2,430,400                          3,287,900
                                                                        = 35%                            = 33.12%
                       
(d)Interest coverage ratio                                 2007/2008                     2008/2009
Net profit before interest and tax                   395,500                           325,500
    Total interest                                                91,000                          151,200 
                                                                     = 4.34:1                          = 2. 15:1

IV) EARNING RATIOS                
       -Dividend per share                                        2007/2008                   2008/2009
           Dividend declared(paid)                             143,500                     105,000
           Number of equity shares                            78,750                         78,750
                                                                               =1.82 shillings           1.33 shillings


     -  Dividend yield                                        2007/2008                                2008/2009
           Dividend per share x 100                   1.82 x100                               1.33 x100
            Market price per share                        45                                          55        
                                                                       =4.04%                                 = 2.42%

   


      - Earning per share                                     2007/2008                              2008/2009
       Net profit after interest and tax                  170,100                                 93,100
            Number of owning shares                      78,750                                  78,750
                                                            =2.16 shillings per share   =1.18 shillings per share

      -  Price earning ratio                                      2007/2008                            2008/2009
             Market price per share                               45                                         55
              Earning per share                                     2.16                                      1.18      
                                                                                                   
                                                                       =20.8 shillings                  =46.7 shillings                                .


  
- Dividend cover ratio                                                2007/2008                   2008/2009
    Net profit after interest and tax                        170,100                            93,100
     Annual dividend                                                 143,500                           105,000
                                                                               =1.18 times                     =0.88 times        










                                                                                                                                                                                                                                                
                                                  


















REFERENCES:                              
Bautista, Sr.I.V and Assad,M.J(1994):Introduction Financial Accounting,DSM University Press Dar es Salaam.

Frank W and Alan S, Business Accounting  11st edition.



































(b) The possible reasons for the significance of changes in the ratios shown by the above calculations
(i) LIQUIDITY RATIOS
      (a)Current ratios
    Reason: slide change in current assets with change in current liabilities, less stock holding and more cash for use.  
Implication: In  2007/2008 Hope Ltd is solvent as its current liabilities are able to pay current liabilities by 2.3 times.
     ( b)quick ratio
       Reason: increase in current assets in 2008/2008
Implication:-In 2007/2008 current assets excluding stock is 1.07 times than current liabilities while in 2008/2009 is about 1.10 times so, the firm has done the best in 2008/ 2009 than in 2007/2008.

 (ii) PERFOMANCE RATIOS
       a)gross profit margin:      
    Reason; good sales differences between years and low cost incurred for sale resulting into greater profits                                                                                                                                                                                                                                                                                                              
      Implication: - In 2007/2008 Hope Ltd has less return on profit which is only 37.8% while in 2008/2009 has more return on profit which is about 39.8%,so the 2008/2009 seems to be a good business year for to the firm.
       b)gross profit margin                                           
Reason for change: increase in expenses in 2007/2009
     Significance:   -In 2007/2008 Hope Ltd has more return on sales about 2.9% compared to 2008/2009which is only 1.2% of return on sales
       c)stock turn-over rate
            Reason for change: fast selling of stock in 2008/2009    
Implication  -In  2008/2009 Hope ltd sells fast its goods than 2007/2008, so it is making better in the year.
    d)  Return on investment
         Reason for change; the small ratio in 2008/2009 may be because of expansion program that has not yet started yieling returns.

 Significance:  -In 2007/2008; the business has performed better since its assets was able to yield high return from profits  
      e)return on capital employed 
Reason for change : increase in assets or capital employed and increase in long term liabilities
Significance of these changes  -in 2008/2009 capital was increased but earned less profit, while in 2007/2008 less resource was used but earned a good return..
   f)fixed asset turn over
      Reason for change:       increase in sales revenue which contributed much to turnover and decrease in fixed assets. 
    Significance of change -In 2007/2008 Hope Ltd has used less assets to generate revenue as used only 14.05times compared to year 2008/2009 where used more assets to generate revenue by 22.18times.
g)current asset turn over
Reason for changes: increase in sales revenue
 Implication:-In 2007/2008 Hope has used more current assets to generate revenue about 3.3times while in 2008/2009 has used fewer current assets to generate revenue only 2.8times.
h)             total asset turn over
      -1n 2007/2008 Hope Ltd has 2.43times of total assets to generate revenue while in 2008/2009 used only 2.38times of total fixed assets to generate revenue.
  i)stock holding period 
Reason for change; the slighter change may be because of the fast moving items the business has started dealing with.     
  Significance: In 2007/2008 the stock seemed to be moving slower compared to 2008/2009, it may indicate the increase in advertising and fast moving item in 2008/2009

   III) GEARING RATIOS
          a)debt ratios
The change may be because of the use of borrowed funds to buy assets
  This implies that: In 2008/2009 the firm is in a good position of paying its debts using its total assets about 33.12% compared to 2007/2008periiod where it was capable of only 32% to pay its long term liabilities out of assets
         b)debt for equity ratio
           The reason for change may be the increase in long-term liabilities with the decrease in equity which implies that In 2008/2009 Hope Ltd is more able to pay its long term liabilities compared to 2007/2008(0.91 to 1.3)

         c) equity ratio
    The decrease in net profits may be the reason for these changes
  Its significance is that; In 2007/2008 Hope Ltd is able to pay 1.82 shillings for each share as dividend to shareholders while in 2008/2009 can only pay 1.33 shillings for each share as dividend, so in 2007/2008 a company is more efficient than in 2008/2009



  d)interest coverage ratio
          The change may be because of decrease in net profit in  2008/2009 which means in 2007/2008 , The firm has the ability to pay interest 4.34 times out of its profit and therefore it has great efficiency in its operations






iv)                EARNING RATIOS
  -DIVIDEND PER SHARE
The decrease in net profits may be the reason for these changes
  Its significance is that; In 2007/2008 Hope Ltd is able to pay 1.82 shillings for each share as dividend to shareholders while in 2008/2009 can only pay 1.33 shillings for each share as dividend, so in 2007/2008 a company is more efficient than in 2008/2009. 

-Dividend yield  
 Reason for change: decrease in dividend per share and increase in market price per share in 2008/2009, this shows that;-In 2007/2008 rate of return to shareholders is high (about 4.04%) compared to 2008/2009 (where it is 2.42%) so Hope Ltd has in a good position of selling shares in 2007/2008 than in 2008/2009 and has a relative good rate of return to shareholders in that year (2007/2008).

-Earning per share

The reason for change may be because of decrease in net profit in 2008/2009,which indicates that In 2007/2008 Hope Ltd has high(large) amount earning for ordinary shareholders (about 2.16 shillings per share) while in 2008/2008 has only 1.18 shillings as profit(earning) for each share


-Price earning ratio    
  The reason for these changes may be because -In 2008/2009 price of share was high (about 46.7 shillings) compared to 2007/2008 was only 20.8 shillings; so, Hope Ltd can sell its shares in 2008/2009 because of the high price hence earn high profits

-dividend cover ratio
The changes may be caused by decrease in net profit that has lead into low payment in dividends, therefore in 2007/2008 Hope Ltd is in a good position of paying dividends to shareholders (can pay 1.18times) while in 2008/2009 it is not in a good position of paying dividends (it can pay only 0.88 times.)









    Workings;
Computing purchases (note 1)
Purchases=(cost of goods sold+closing stock)-opening stock
                   = (4,704,000+1,356,600)-966,000
                  =5,094,600