Introductory Accounting: How Sirtex Is A Medical Company
ACCT 1046 Introductory Accounting
Assignment - Semester 2, 2012
Part A: The Company
Q1.
Sirtex is a Medical company that produces and distributes SIR – Spheres microspheres which are fluid medical treatments for treating liver cancer. This treatment is said ‘to target tumours with internal radiation without causing significant side effects to the normal cells around the tumour.’ (Sirtex 2011, p.2). Sirtex has created this so that it’s another way of treating liver cancer other than radiotherapy (Sirtex 2011).
Q2.
There are four members in the board of directors in Sirtex Medical Ltd:
Independent Directors:
Richard Hill – Non-executive Director, Chairman (Sirtex 2011)
Dr. John Eady – Non-executive Director, Deputy Chairman (Sirtex …show more content…
Comparing the year 2010 to 2011, the ratio has decreased which means that the dollar amount of current assets per dollar of liability is lower (Birt et al. 2010). According to Birt et al. (2010), having a high current ratio means that the business has excess investments to unprofitable assets – cash, receivables, and inventory. The decrease in ratio means now that they are trying to make use of these unprofitable assets by increasing their liability, though their ability to meet short term financial debt is met (above 1) which means that their liquidity is in a good position.
Acid test ratio:
According to Birt et al. (2010), acid test ratio measures the liquidity of the business. The value of the acid test ratio of 4.2 allows the business to meet its short term obligations as needed and so they are in a good position. Their decrease in the acid test ratio could mean that they are trying to make use of the unprofitable assets, not leaving the ratio too high for higher liquidity.
Average inventory turnover:
This value measures how fast stock (inventory) is turned into cash. The lower of this value means higher profitability so Sirtex has decided to lower this value for higher profit and faster inventory …show more content…
Sirtex has a better average inventory turnover over Company X, this puts them on a better profitability if we only look at the AIT itself, but considering the ROA, GPM similarities from the company, it only comes down to the net profit margin and company X shows that they are doing a great job in maintaining their net profit over sales while Sirtex has shown a big reduction in the net profit margin. This puts Company X on a better position comparing to Sirtex and this is the big reason why I’d choose Company X over Sirtex.
Reference List
Birt, J, Chalmers, K, Byrne, S, Brooks, A & Oliver, J 2010, Accounting: Business reporting for decision making, 3rd edn, John Wiley & Sons Australia, Ltd, Milton, QLD.
Telstra 2007, $3 million up for grabs to bring older Australians into technical age, Telstra, Australia, viewed 15th August 2007,
<http://www.telstra.com.au/abouttelstra/csr/stories_article.cfm?ObjectID=40297>.
Sirtex 2012, Sirtex Annual Report 2011, Sirtex, Australia, viewed 9th September 2012,
Assignment - Semester 2, 2012
Part A: The Company
Q1.
Sirtex is a Medical company that produces and distributes SIR – Spheres microspheres which are fluid medical treatments for treating liver cancer. This treatment is said ‘to target tumours with internal radiation without causing significant side effects to the normal cells around the tumour.’ (Sirtex 2011, p.2). Sirtex has created this so that it’s another way of treating liver cancer other than radiotherapy (Sirtex 2011).
Q2.
There are four members in the board of directors in Sirtex Medical Ltd:
Independent Directors:
Richard Hill – Non-executive Director, Chairman (Sirtex 2011)
Dr. John Eady – Non-executive Director, Deputy Chairman (Sirtex …show more content…
Comparing the year 2010 to 2011, the ratio has decreased which means that the dollar amount of current assets per dollar of liability is lower (Birt et al. 2010). According to Birt et al. (2010), having a high current ratio means that the business has excess investments to unprofitable assets – cash, receivables, and inventory. The decrease in ratio means now that they are trying to make use of these unprofitable assets by increasing their liability, though their ability to meet short term financial debt is met (above 1) which means that their liquidity is in a good position.
Acid test ratio:
According to Birt et al. (2010), acid test ratio measures the liquidity of the business. The value of the acid test ratio of 4.2 allows the business to meet its short term obligations as needed and so they are in a good position. Their decrease in the acid test ratio could mean that they are trying to make use of the unprofitable assets, not leaving the ratio too high for higher liquidity.
Average inventory turnover:
This value measures how fast stock (inventory) is turned into cash. The lower of this value means higher profitability so Sirtex has decided to lower this value for higher profit and faster inventory …show more content…
Sirtex has a better average inventory turnover over Company X, this puts them on a better profitability if we only look at the AIT itself, but considering the ROA, GPM similarities from the company, it only comes down to the net profit margin and company X shows that they are doing a great job in maintaining their net profit over sales while Sirtex has shown a big reduction in the net profit margin. This puts Company X on a better position comparing to Sirtex and this is the big reason why I’d choose Company X over Sirtex.
Reference List
Birt, J, Chalmers, K, Byrne, S, Brooks, A & Oliver, J 2010, Accounting: Business reporting for decision making, 3rd edn, John Wiley & Sons Australia, Ltd, Milton, QLD.
Telstra 2007, $3 million up for grabs to bring older Australians into technical age, Telstra, Australia, viewed 15th August 2007,
<http://www.telstra.com.au/abouttelstra/csr/stories_article.cfm?ObjectID=40297>.
Sirtex 2012, Sirtex Annual Report 2011, Sirtex, Australia, viewed 9th September 2012,