mfrd - burberry

7/26/2019 MFRD - Burberry

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BANKING ACADEMY, HANOI

BTEC HND IN BUSINESS (FINANCE)

ASSIGNMENT COVER SHEET

NAME OF STUDENT Owlish GroupREGISTRATION NO.

UNIT TITLE Unit 2: Managing Financial Resources and DecisionsASSIGNMENT TITLE Financial Decisions and Financial Performance AnalysisASSIGNMENT NO Assignment 2 f 2NAME OF ASSESSOR Mr! "U# A$%"O &A'(A#SUBMISSION DEADLINE )th"anuary* 2)+

We ________Owlish Group__________________ hereby confrm that this assignment is

our own work and not copied or plagiarized rom any source. We have reerenced

the sources rom which inormation is obtained by us or this assignment.

#ame of ,tudents ,tudent #um-er ,ignature Date

./(0ng.1n F32 )4)42)+

./Anh'rang F32+) )4)42)+

Ph5m'h67h8nh(uy9nF3 )4)42)+

#guy;nPh? )4)42)+

----------------------------------------------------------------------------------------------------------------

FOR OFFICIAL USE

Assignment Recei@ed &y: Date:

OWLISH GROUP F05A Page !


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"nit Outcomes

Outcome

#vidence

or the

criteriaFeedback

Assessors

dec!s!o"

I"ter"a#

$er!%!cat!o"

&e a-le tomae

financialdecisions

-ased onfinancial

information

&L'()

Analyse-udgets and

maeappropriatedecisions

(.*

%Bplain thecalculation unitcosts and mae

pricingdecisions using

rele@antinformation

(.+

Assess the@ia-ility of aproCect usingin@estment

appraisaltechniues

(.(

&e a-le toe@aluate the

financialperformanc

e of a-usiness

&L',)

Discuss themain financial

statements,.*

Eompareappropriateformats offinancial

statements fordifferent typesof -usiness

,.+

OWLISH GROUP F05A Page $


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Outcome

#vidence

or the

criteriaFeedback

Assessors

dec!s!o"

I"ter"a#

$er!%!cat!o"

nterpretfinancial

statementsusing

appropriateratios and

comparisons-oth internaland eBternal

,.(

Mer!t rades aarded M* M+ %&

D!st!"ct!o" rades aarded D* D+ '&

OWLISH GROUP F05A Page &

Assignment

H Iell3structuredJ Reference is done properly 4 should -e done if anyH

O@erall* youK@e

Areas %or !m/ro0eme"

ASSESSOR SIGNATURE DATE 1 1

NAME2!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

&Ora# %eedback as a#so /ro0!ded)

STUDENT SIGNATURE DATE 1 1

NAME 2!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

FOR INTERNAL USE ONLY

.%RF%D L%, #O

DA'% : !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

.%RF%D &L : !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!#AM% : !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!


4/31

Financial Decisions and Financial Performance Analysis

Prepared for

LecturerMr. JunAleo!at"an

Un#t $% Manan& F#nance Re'ource' and (ec#'#on'

!an)#n& Acade*+, Hano#

!-/ H( #n 1u'#ne'' 2F#nance3

Prepared 1+%

O4l#'" Group

Re'trat#on o% F05060

o of 4ord'% 7000

Su1*#''#on (ate% $0t"Januar+, 80$7

OWLISH GROUP F05A Page (


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-A!L OF /O--S

9/U-I: SUMMAR;.............................................................................................................ternall+ 24#t"#n t"e #ndu'tr+,

u'#n& #ndu'tr#al rat#o' or t"e rat#o' fro* t"e co*pan#e' #n t"e 'a*e #ndu'tr+3. -o "elp reader' feel

ea'#er 4"en *a)#n& t"e anal+'#' of f#nanc#al 'tate*ent', !ur1err+, 4"#c" #' #n t"e per'onal &ood'

#ndu'tr+, #' c"o'en a' an e>a*ple. In t"#' e>a*ple, t"e paper u'e' t"e f#nanc#al 'tate*ent' of f#?e

f#'cal +ear', fro* 800< to 80$8, to calculate t"e rat#o' and *a)#n& t"e co*par#'on. -"e

calculat#on and for*ula' are al'o 4r#tten #n deta#l 'o t"at #t #' *uc" ea'#er for reader' to #nterpret

and appl+ #n t"e#r o4n co*pan#e'.

OWLISH GROUP F05A Page +


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INTRODUCTION

Manan& F#nanc#al Re'ource' and (ec#'#on' #' a un#t de'#&ned to ?e under'tand#n& of "o4

f#nance #' *ana&ed 4#t"#n 1u'#ne'' or&an#Cat#on'. It #nclude' t"e 4a+ to e?aluate d#fferent

'ource' of f#nance, co*pare t"e 4a+' #n 4"#c" t"e'e are u'ed, "o4 to u'e f#nanc#al #nfor*at#on

to *a)e dec#'#on', con'#derat#on of pr#c#n& and #n?e't#n& dec#'#on' a' 4ell a' 1ud&et#n&. F#nall+,

#t ?e' leaner' tec"n#ue' to e?aluate f#nanc#al 'tate*ent.

In t"#' a''#&n*ent, a' a f#nanc#al anal+'t #n 9; /o*pan+, f#nanc#al con'ultanc+ f#r* #n t"e U=,

4e are reu#red to re?#e4, anal+Ce and pro?#de report to t"e t"ree co*pan#e' 4"#c" are a''#&ned

t"e c"#ef f#nanc#al co*ptroller of t"e co*pan#e' and to e>tract t"e late't f#nanc#al 'tate*ent' of

an+ co*pan+ of our c"o#ce t"at #' l#'ted #n t"e London Stoc) >c"an&e. -"e c"o'en co*pan+

"ere #' !ur1err+, an #nfa*ou' and old co*pan+ #n clot"#n& and acce''or#e' #ndu'tr+ of U=.

-"#' report #' d#?#ded #nto t"ree *a#n ta')'. ac" ta') co?er' part#cular top#c'.

-a') $ co?er' t4o top#c'%

Anal+'#' of 1ud&et' and appropr#ate dec#'#on *a)#n&

>planat#on of t"e calculat#on un#t co't' and pr#c#n& dec#'#on *a)#n& u'#n& rele?ant

#nfor*at#on

-a') 8 co?er' a''e''*ent of t"e ?#a1#l#t+ of a proect u'#n& #n?e't*ent appra#'al tec"n#ue'

-a') 7 co?er' top#c' related to !ur1err+, t"e c"o'en co*pan+%

(#'cu''#on t"e *a#n f#nanc#al 'tate*ent'

/o*par#'on of appropr#ate for*at' of f#nanc#al 'tate*ent' for d#fferent t+pe' of 1u'#ne''

Interpretat#on of f#nanc#al 'tate*ent' u'#n& appropr#ate rat#o' and co*par#'on' 1ot"

#nternal and e>ternal

-"e 'ource' of #nfor*at#on and for*ula' *o'tl+ co*e fro* 1oo)', onl#ne art#cle'. -"e *a#n

f#nanc#al 'tate*ent' of !ur1err+ are fro* t"e co*pan+E' annual report.

OWLISH GROUP F05A Page ,


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MAIN ODY

TAS! "# A$ili%y of ma&in' (rice decision $ased on financial informa%ion

O)%come *+"# Analysis of $)d'e%s and a((ro(ria%e decisions

3.1.1: Flexible budget and budgetary control

)d'e% Ac%)al res)l%s Variance

Product#on 2un#t'3 @,000 B,000 8,000

(#rect *ater#al' $8,000 $0,500 2$,5003(#rect la1or


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Product#on 2un#t'3 @,000 B,000 B,000

/ariable costs(#rect *ater#al' $8,000 $pected. -"e rea'on for t"e

#*pro?e*ent #' t"at, ?en output of B,000 un#t', co't' 4ere lo4er t"an e>pected.

Spec#f#call+, #n ?ar#a1le co't', d#rect *ater#al' 4ere reduced 1+ ,500, d#rect la1or 4ere

reduced 1+ 7,500, and *a#ntenance decrea'ed 1+ 500. In 'e*#?ar#a1le co't', ot"er

co't' *#&"t 1e reduct#on #n u'a&e of 4ater and electr#c#t+, 4"#c" 'a?ed t"e co*pan+

ed co't #ncrea'ed 1+ $,000. It can 1e a''u*ed t"at t"e co*pan+ 1ou&"t *ore

*ac"#ne' and e>panded t"e 1u'#ne''. -"erefore, deprec#at#on, rent and rate' #ncrea'ed 1ut

not *uc" co*pared to t"e reduct#on of ?ar#a1le co't' and 'e*#?ar#a1le co't'.c3 In conclu'#on, t"e &ap 1et4een fle>#1le 1ud&et and actual 1ud&et #' too 4#de

For*ula%Variance

Flexible100=

19,000

53,500100 35.5

A*on& t"e ?ar#ance', t"e ?ar#ance' of 'e*# ?ar#a1le co't' are t"e "#&"e't%

Se*# ?ar#a1le co't ?ar#ance%8,500

13,500 100 63

So*e of t"e rea'on' could 1e F05 Ltd 'et 'tandard co't too "#&" co*pared to real#t+. -"e

co*pan+ '"ould recon'#der to 'et *ore 'u#ta1le 'tandard co't.

d3 A full ?ar#ance anal+'#' 'tate*ent 4ould 1e a' follo4'%

OWLISH GROUP F05A Page !


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1 1

F#>ed 1ud&et co't' 7pected e*plo+eeE' 1e"a?#or' l#)e 1e#n& late for 4or), #ndu'tr#al acc#dent', re'ult #n

t"e deduct#on of la1or. Moreo?er, 4"en t"e 4or) ta)e' lon&er to co*plete, #t lead' to an

#ncrea'e #n la1or "our and 'alar+ pa+*ent 1ecau'e of o?ert#*e 4or)#n&.

Idle t#*e% (ue to natural d#'a'ter', t"e factor+ cannot operate 1ut 't#ll "a' to pa+ for rent,

rate', 'alar+. !e'#de', *ac"#ne *a#ntenance or 1rea)do4n can al'o re'ult #n an #dle t#*e.

Sale'% Mar)et and econo*#c cond#t#on' can re'ult #n ?ar#ance of 'ale'. *er&ence of ne4

co*pet#tor', #nten'e r#?alr+ a*on& e>#'t#n& f#r*' *a+ cau'e a decrea'e #n 'ale'.

Sell#n& o?er"ead'% #nclude all #nd#rect *ater#al', 4a&e' and e>pen'e' #ncurred #n

pro*ot#n& 'ale' and reta#n#n& cu'to*er' 2!PP, 80$03. &% pr#nt#n& catalo&ue', 4e1'#te

*a#ntenance co't', ad?ert#'#n& and 'ale' pro*ot#on

(#'tr#1ut#on o?er"ead'% #nclude #nd#rect *ater#al' co't', 4a&e' and e>pen'e' #ncurred #n

*a)#n& t"e pac)ed product read+ for del#?er#n& to cu'to*er 2!PP, 80$03.&% 4a&e' for

pac)er', dr#?er', 4are"ou'e'E rent rate'.

OWLISH GROUP F05A Page !!


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O)%come *+2# E,(lana%ion of %3e calc)la%ion )ni% cos%s and (ricin' decisions )sin' rele/an%

informa%ion

3.2.1: Specification of production costs

/o't of product#on #' a co't #ncurred 1+ a 1u'#ne'' 4"en *anufactur#n& a &ood or produc#n& a

'er?#ce2In?e'toped#a, 80$83.It can 1e cla''#f#ed #nto t4o t+pe'% d#rect co't and #nd#rect co'ta. (#rect co't

Mater#al% #' co't of t"o'e *ater#al' 4"#c" can 1e #dent#f#ed #n t"e product and can

1e con?en#entl+ *ea'ured and d#rectl+ c"ar&ed to t"e product. 2A''ar, 80$83. For

e>a*ple, co*ponent part' purc"a'ed for a part#cular o1', pr#*ar+ pac)#n&

*ater#al' l#)e carton, 1o>e'.

La1or% #nclude' t"e actual co't of 4a&e' a' 4ell a' t"e e*plo+*ent ta>e' accrued

on t"e'e 4a&e' 2Garten'te#n, 80$83. For e>a*ple, 4a&e' and 'alar#e' for 4or)er'

part#c#pat#n& d#rectl+ #n produc#n& &ood'.

>pen'e'% #' t"at port#on of e>pen'e t"at #' d#rectl+ e>pended #n pro?#d#n& a

product or 'er?#ce for 'ale and #' #ncluded #n t"e calculat#on of co't of &ood' 'old

2W.Lee, 80$83. &% 'uppl#e', po4er, fuel.

1. Ind#rect co't

Product#on o?er"ead% 2Pea?ler, 80$73

Ind#rect *ater#al% *a)e product#on of a co*pan+' product' po''#1le 1ut

cant 1e a''#&ned to u't one product. &% lu1r#cant', &lue, 'cre4', tape'.

Ind#rect 4a&e'% all 4a&e' *a)e product#on of a product or product'

po''#1le 1ut cant 1e a''#&ned to one part#cular product. &% Wa&e' for

'tore' 'taff, *a#ntenance 'taff.

Ind#rect e>pen'e'% affect' t"e ent#re co*pan+, not u't one product. &%

rent, rate', #n'urance of plant.

Ad*#n#'trat#on o?er"ead'% t"e #nd#rect e>pend#ture #ncurred #n for*ulat#n& t"e

pol#c+, d#rect#n& t"e or&an#'at#on and controll#n& t"e operat#on' of an underta)#n&

2A''ar, 80$83.&% (eprec#at#on of off#ce co*puter eu#p*ent, &eneral off#ceE'

rent, rate, and #n'urance Sell#n& o?er"ead'% #nclude' t"e co't of 'ee)#n& to create and 't#*ulate de*and

and of 'ecur#n& order' and co*pr#'e' to co't to product' dealt #n and of effort' to

f#nd and reta#n cu'to*er'2A''ar, 80$83. &% pr#nt#n& catalo&ue', 4e1'#te

*a#ntenance co't', ad?ert#'#n& and 'ale' pro*ot#on

OWLISH GROUP F05A Page !$


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(#'tr#1ut#on o?er"ead'% #nclude t"e e>pend#ture #ncurred #n t"e proce'', 4"#c"

1en' 4#t" *a)#n& t"e pac)ed product a?a#la1le for d#'patc" 2A''ar, 80$83

2A''ar, 80$83. &% 4a&e' for pac)er', dr#?er' and d#'patc" cler)'

3.2.2: Explanation of F! "td costs #hich should be used for decision$ma%ing

-"e co't' t"at '"ould 1e u'ed for dec#'#on*a)#n& are often referred to a' relevant costs. F05

LtdE' rele?ant co't can 1e d#?#ded #nto t4o co't', #nclud#n& #ncre*ental co't and opportun#t+

co't.

a. Incre*ental co't.

Incre*ental co't #' a co't a''oc#ate 4#t" produc#n& an add#t#onal un#tN 2HafeeCr*, 80$83. It

#nclude' *an+ d#fferent d#rect and #nd#rect co't' depend#n& on t"e '#tuat#on. For e>a*ple, #f F05

Ltd produce' at full capac#t+, t"e #ncre*ental co't of add#n& product#on un#t' *#&"t #nclude co't'

of eu#p*ent, 4or)er'E 'alar+, electr#c#t+ to run t"e product#on l#ne to *a)e *ore product'.

1. Opportun#t+ co't

Opportun#t+ co't #' t"e co't of a fore&one alternat#?e. If +ou c"o'e one alternat#?e o?er anot"er,

t"en t"e co't of c"oo'#n& t"at alternat#?e #' an opportun#t+ co'tN 2Pea?ler, 80$83. W"en F05 Ltd

dec#de' to &o for a part#cular proect, #t 4#ll #&nore ot"er proect' and 4#ll lo'e opportun#t#e' for

t"e*.

c. F#>ed co't and ?ar#a1le co't

A' !PP 280$03 po#nted out, #n dec#'#on*a)#n&, t"e d#'t#nct#on 1et4een f#>ed co't and ?ar#a1le

co't 1eco*e' ?er+ #*portant. /ontr#1ut#on 2to f#>ed co't3 #' t"e d#fference 1et4een 'ell#n& pr#ce

and ?ar#a1le co't.

OWLISH GROUP F05A Page !&


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TAS! 2# A$ili%y of ma&in' (rice decision $ased on financial informa%ion

O)%come *+*# Assessmen% of %3e /ia$ili%y of a (ro4ec% )sin' in/es%men% a((raisal %ec3ni5)es

3.3.1: &verage rate of return

A?era&e rate of return 2ARR3 #' an #n?e't#n& concept t"at '"o4' "o4 *uc" an #n?e't*ent *ade

o?er t"e #n?e't*ent' l#fe. It #' #*portant for #n?e'tor' to calculate t"e#r ARR 'o t"e+ can *a)e

1etter co*par#'on' 1et4een t"e return' of d#fferent #n?e't*ent'N 2Jo"n'on, 80$83

!ecau'e 'tra#&"tl#ne deprec#at#on 4#ll 1e u'ed and no re'#dual ?alue #' e>pected, t"e total

deprec#at#on 4#ll 1e


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3.3.2: 'et present value

et pre'ent ?alue 2P:3 #' one of 'e?eral *et"od' #n?e'tor' and co*pan#e' u'e to e?aluate t"e

potent#al prof#ta1#l#t+ of an #n?e't*ent or proect. P: *ea'ure' t"e total a*ount 1+ 4"#c" an

#n?e't*ent #' e>pected to #ncrea'e 1a'ed on t"e pre'ent ?alue of #t' potent#al ca'" flo4' and

#n#t#al co'tN 2=e+t"*an, 80$83. et pre'ent ?alue of t4o proect' #' '"o4n a' 1elo4%

a. Proect A

Year Pay$ac& ca(i%al

1

Disco)n% ra%e

-r 7 "86.

Presen% /al)e

-PV.

0


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2$6,$70.@7 K $#1le t#*e fra*e, S#*ple

/o*par#'on2Hart*an, 80$83. -"#' calculat#on #' u#et ea'+ for #n?e'tor' to under'tand, #t clearl+

'"o4' 4"at t"e+ &et #f t"e+ #n?e't #n proect'. Ho4e?er, t"e ARR"a' d#'ad?anta&e',

2Account#n&e>pla#ned ,80$83%

I&nor#n& t#*e ?alue of *one+.

(ue to ?ar#ou' 4a+' of calculat#on, t"e re'ult' do not un#f+.

OWLISH GROUP F05A Page !*


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S"ould not 1e u'ed #n 1#& proect' 1ecau'e #t u'e' account#n& #nco*e #n'tead of

ca'" flo4 data.

P: "elp' co*pan+ co*pare t"e ?alue of *one+ at t"e pre'ent t#*e and t"e future2-"o*a'on,

80$83. Ho4e?er, P: need'plent+ of #nfor*at#on. W#t" *an+ proect' to con'#der, 4"en t"e

#nfor*at#on #' not co*pleted and accurate, #t 4#ll d#rectl+ #nfluence t"e anal+'#' tool.

!a'ed on ad?anta&e' and d#'ad?anta&e' of 1ot" ARR and P:, #n?e'tor '"ould u'e P: *et"od

#n e't#*at#n& t"e effect#?ene'' of proect'. -"erefore, proect ! #' 1etter.

TAS! *# A$ili%y of e/al)a%in' %3e financial (erformance of a $)siness

O)%come :+"# Disc)ssion of %3e main financial s%a%emen%s

*.1.1: Balance sheet

a. efinition

A 1alance '"eet #' a f#nanc#al report 'tat#n& t"e total a''et', l#a1#l#t#e', and o4ner' eu#t+ of an

or&an#Cat#on at a ?en date, u'uall+ t"e la't da+ of t"e account#n& per#od. -"e cred#t '#de of t"e

1alance '"eet 'tate' a''et', 4"#le t"e de1#t '#de 'tate' l#a1#l#t#e' and eu#t+, and t"e t4o '#de'

*u't 1e eual, or 1alance2R#le+, 80$83.

b. ,ontents

Accord#n& to R#le+280$83

A''et' #nclude ca'" #n "and and ca'" ant#c#pated 2rece#?a1le'3, #n?entor#e' of 'uppl#e'

and *ater#al', eu#p*ent, and 4"ate?er el'e t"e co*pan+ u'e' to conduct 1u'#ne''.

A''et' al'o need to reflect deprec#at#on #n t"e ?alue of eu#p*ent 'uc" a' *ac"#ner+ t"at

"a' a l#*#ted e>pected u'eful l#fe.

L#a1#l#t#e' #nclude pend#n& pa+*ent' to 'uppl#er' and cred#tor', out'tand#n& current and

lon&ter* de1t', ta>e', #ntere't pa+*ent', and ot"er unpa#d e>pen'e' t"at t"e co*pan+

"a' #ncurred.

O4ner' u#t+ con'#'t' of cap#tal #n?e'ted 1+ o4ner' o?er t"e +ear' and prof#t' 2net

#nco*e3 or #nternall+ &enerated cap#tal, 4"#c" #' referred to a' Qreta#ned earn#n&'Q.

OWLISH GROUP F05A Page !+


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*.1.2: +ncome statement

a. efinition

An #nco*e 'tate*ent #'a "#'tor#cal record of t"e trad#n& of a 1u'#ne'' o?er a 'pec#f#c per#od

2nor*all+ one +ear3. It '"o4' t"e prof#t or lo'' *ade 1+ t"e 1u'#ne'' 4"#c" #' t"e d#fference

1et4een t"e f#r*E' total #nco*e and #t' total co't' 2R#le+, 80$83.

b. ,ontents

Accord#n& to 2R#le+, 80$83, an #nco*e 'tate*ent #nclude'%

Re?enue% -"e re?enue' 2'ale'3 dur#n& t"e per#od are recorded "ere. So*et#*e' referred

to a' t"e top l#neN re?enue '"o4' t"e total ?alue of 'ale' *ade to cu'to*er'.

/o't of 'ale'% -"e d#rect co't' of &enerat#n& t"e recorded re?enue' &o #nto co't of 'ale'N.-"#' 4ould #nclude t"e co't of ra4 *ater#al', co*ponent', &ood' 1ou&"t for re'ale and

t"e d#rect la1our co't' of product#on.

Gro'' prof#t% -"e d#fference 1et4een re?enue and co't of 'ale' and #' u'ed to calculate t"e

&ro'' prof#t *arn 23.

Operat#n& prof#t% A )e+ *ea'ure of prof#t 4"#c" record' "o4 *uc" prof#t "a' 1een *ade

#n total fro* t"e trad#n& act#?#t#e' 1efore an+ account #' ta)en of "o4 t"e 1u'#ne'' #'

f#nanced.

F#nance e>pen'e'% Intere't pa#d on 1an) and ot"er 1orro4#n&', le'' #ntere't #nco*erece#?ed on ca'" 1alance', #' '"o4n "ere.

Prof#t 1efore ta>% /alculated a' operat#n& prof#t le'' f#nance e>pen'e'

-a>% An e't#*ate of t"e a*ount of corporat#on ta> t"at #' l#)el+ to 1e pa+a1le on t"e

recorded prof#t 1efore ta>

*.1.3: ,ash flo# statement

a. efinition%

A ca'" flo4 'tate*ent #' a 'tate*ent 'pec#f+#n& t"e ca'" #nflo4' and ca'" outflo4' ar#'#n& fro*t"e Operat#n&, In?e't#n& and F#nanc#n& act#?#t#e' dur#n& t"e t4o 'ucce''#?e 1alance '"eet'

e>pla#n#n& t"e d#fference 1et4een t"e open#n& and clo'#n& ca'" 1alance 2Gupta, 800


19/31

Fro* operat#n& act#?#t#e'%Operat#n& act#?#t#e' are *a#n re?enue&enerat#n& act#?#t#e' and

ot"er act#?#t#e' t"at are not #n?e't#n& or f#nanc#n& act#?#t#e'.

Fro* #n?e't#n& act#?#t#e'%In?e't#n& act#?#t#e' are t"e acu#'#t#on and d#'po'al of lon&ter*

a''et' and ot"er #n?e't*ent' not #ncluded #n ca'" eu#?alent'.

Fro* f#nanc#n& act#?#t#e'%F#nanc#n& act#?#t#e' are act#?#t#e' cau'#n& c"an&e' #n t"e '#Ce

and co*po'#t#on of o4ner'E cap#tal #nclud#n& preference '"are cap#tal #n t"e ca'e of a

co*pan+ and 1orro4#n&' of t"e enterpr#'e.

O)%come :+2# Difference amon' forma%s of financial s%a%emen%s for differen% %y(es of

$)siness

*.2.1: Balance Sheet

-"e *a#n d#fference' a*on& d#fferent t+pe' of 1u'#ne'' #n 1alance '"eet are a''et' and o4nerE'

eu#t+ 2Ant"on+, 80$83

A''et'% A''et' are '"o4n on t"e top "alf of 1alance '"eet, #nclud#n& f#>ed a''et', current

a''et and net current a''et'. Ho4e?er, t"e co*pan+ "a' to co*pl+ 4#t" la+out' of

/o*pan+ Act, and u'e part#cular' 4ord#n&'. Sole trader' and partner'"#p are u#te free

4"en pre'ent#n& 1alance '"eet. -"e+ can pre'ent #t a' t"e+ 4#'".

O4nerE' eu#t+% For 'ole trader, o4nerE' eu#t+ #' u#te '#*ple, #nclud#n& open#n& cap#tal,

prof#t, and clo'#n& cap#tal, 4"erea' eu#t+ for partner'"#p, cap#tal account' are pre'ented

accord#n& to partner'. /o*pan+E' prof#t #' pre'ented #n for* of reta#ned earn#n&',

4"erea' #t #' reported a' net prof#t for 'ole trader and partner'"#p.

*.2.2: +ncome Statement

In #nco*e 'tate*ent, t"e e>pend#ture of co*pan+ #' u#te d#fferent fro* 'ole trader and

partner'"#p 2(I;Account#n&, 80$83. /o*pan+ "a' to 'pend *one+ on corporate ta> and

d#?#dend'. In'tead of pa+#n& corporate ta>, 'ole trader and partner'"#p "a' to pa+ per'onal

#nco*e ta> on t"e#r prof#t' and #t #' not pre'ented on #nco*e 'tate*ent.

*.2.3: Statement of ,ash Flo#s

-"ere are t"ree *a#n t+pe' of 1u'#ne'' act#?#t#e', #nclud#n& operat#n&, #n?e't#n& and f#nanc#n&.

In?e't*ent #' onl+ fro* one per'on for 'ole trader, fe4 people for partner'"#p, 1ut *an+ for

OWLISH GROUP F05A Page !-


20/31

co*pan+. F#nanc#n& act#?#t#e' #nclude' offer#n& preference '"are cap#tal, 4"#c" t4o ot"er t+pe'

do not "a?e.

O)%come :+*# In%er(re%a%ion of financial s%a%emen%s )sin' a((ro(ria%e ra%ios and

com(arisons $o%3 in%ernal and e,%ernal

*.3.1 -rofitability and return on capital

a. Prof#t 1efore #ntere't and ta>e' 2P!I-3

P!I- repre'ent' earn#n&' 2#nco*e3 of t"e co*pan+ fro* #t' on&o#n& operat#on',

lea?#n& out #ntere't #nco*e and ta> e>pen'e' 2Murra+, 80$83

For*ula

P!I- Re?enue /o't of &ood' 'old Sell#n&, &eneral, and ad*#n#'trat#?e

e>pen'e'

!ur1err+E' P!I-

2


21/31

Year 2


22/31

L#a1#l#t#e' rat#o Total liabilities

Total assets

!ur1err+E' l#a1#l#t#e' rat#o

-"e l#a1#l#t#e' rat#o #' prett+ 'afe for !ur1err+ 1ecau'e #t' l#a1#l#t#e' do not e>ceed #t' a''et'.

Ho4e?er, #t '"ould tr+ to lo4er t"e l#a1#l#t#e' rat#o to *a)e 'ure t"e co*pan+ doe' "a?e too

*an+ l#a1#l#t#e'.

1. Intere't co?er rat#o #' a *ea'ure of t"e adeuac+ of a co*pan+' prof#t' relat#?e to #ntere't

pa+*ent' on #t' de1t 2P#eter'C, 80$83

For*ula

Intere't co?er PBT

nterest paid

!ur1err+E' #ntere't co?er

OWLISH GROUP F05A Page $$

Year To%al

de$%s

To%al asse%s Bia$ili%ies ra%io

*#ll#on *#ll#on800< @5.6 657.8 @


23/31

O?erall, !ur1err+E' #ntere't co?er #' "#&". It #llu'trate' t"at !ur1err+ can ea'#l+ *eet #t' #ntere't

o1l#&at#on' fro* #t' prof#t'. It can *a)e enou&" prof#t' to pa+ for #t' #ntere't.

*.3.3 "iuidity and #or%ing capital ratios

a. L#u#d#t+ rat#o'

/urrent rat#o #' an e>cellent d#a&no't#c tool a' #t *ea'ure' 4"et"er or not a

1u'#ne'' "a' enou&" re'ource' to pa+ #t' 1#ll' o?er t"e ne>t $8 *ont"'2Ward,

80$83 For*ula

/urrent rat#o Current assets

Current liabilities

!ur1err+E' current rat#o

Year C)rren% asse%s C)rren% lia$ili%ies C)rren%

ra%io

*#ll#on *#ll#on

800< 5


24/31

-"e u#c) rat#o' are "#&", e'pec#all+ #n 80$0 and 80$8. -"#' #nd#cate' t"at !ur1err+ can pa+ #t'

due de1t' *ore ea'#l+.

1. ff#c#enc+ rat#o'

-rade de1tor' da+ #' t"e nu*1er of da+' t"e de1tor' ta)e to pa+ 2P#eter'C, 80$83

For*ula

-rade de1tor' da+ Trade debtors

!ales > 7B5 da+'

!ur1err+E' trade de1tor' da+

-"e trade de1tor' da+ decrea'e' o?er t"e la't f#?e +ear'. It '"o4' t"at !ur1err+E' *ana&e*ent

"a' 1een &ett#n& 1etter 1ecau'e #t can *a)e t"e de1tor' ta)e le'' t#*e to pa+.

Stoc) turno?er per#od #nd#cate' t"e nu*1er of da+' t"e 'toc)' are "eld for

For*ula

OWLISH GROUP F05A Page $(

Year Trade

de$%ors

Sales Trade de$%ors day

*#ll#on *#ll#on da+'

800< $@$.7 665.@ 5$.#1le 1ud&et and 1ud&etar+ control 4#t" ?ar#ance anal+'#' and po''#1le

cau'e' of t"e*. We al'o 'pec#f#ed co't' for t"e ?en co*pan#e' and e>pla#ned t"e* #n deta#l. In

ta')8, 4e co*puted a?era&e return rate' and net pre'ent ?alue' for t"e t4o ?en proect' and

"a?e *ade dec#'#on to c"oo'e one of t"e* 1a'ed on t"o'e 'tat#'t#c'. And f#nall+, #n ta') 7,

!ur1err+E' *a#n f#nanc#al 'tate*ent' 4ere d#'cu''ed. I*portant rat#o' 4ere calculated and

co*pared 4#t" f#?e pre?#ou' +ear' to ?e t"e &eneral #dea' of t"e co*pan+E' 1u'#ne''

perfor*ance.

-"e report 4a' t"orou&" and deta#led. Ho4e?er, #t "a' 'o*e dra41ac)'. !ecau'e t"ere #' a lac)

of 'tat#'t#c' fro* t"e 'a*e #ndu'tr+ a' !ur1err+, 4e could not *a)e co*par#'on' e>ternall+. e>t

t#*e, #f 4e "a?e 'uff#c#ent 'ource' of #nfor*at#on, t"#' report 4#ll 1e #*pro?ed *uc" 1etter.

OWLISH GROUP F05A Page $+


28/31

APPENDICES

A. RFR/S

Ant"on+, L., 80$8. ,hron. Onl#neT A?a#la1le at%"ttp%'*all1u'#ne''.c"ron.co*for*at

f#nanc#al'tate*ent7Bpend#ture1a'#cta>

Art#cle.doAcce''ed 8 Januar+ 80$7T.

Garten'te#n, (., 80$8. e4o#. Onl#neT A?a#la1le at%

"ttp%444.e"o4.co*a1outB$B0@Bdef#nela1orco't."t*lAcce''ed 8B (ece*1er

80$8T.

Gupta, ., 800


29/31

Jo"n'on, S., 80$8. e4o#. Onl#neT A?a#la1le at% "ttp%444.e"o4.co*"o4B


30/31

R#le+, J., 80$8. tutor2u. Onl#neT A?a#la1le at%

"ttp%444.tutor8u.net1u'#ne''account'prof#tlo''account."t*Acce''ed 7$

(ece*1er 80$8T.

R#le+, J., 80$8. tutor2u. Onl#neT A?a#la1le at%

"ttp%444.tutor8u.net1u'#ne''account'prof#tlo''account."t*Acce''ed 8 (ece*1er80$8T.

-"o*a'on, =., 80$8. e4o#. Onl#neT A?a#la1le at%

"ttp%444.e"o4.co*#nfo


31/31

!. FIA/IAL S-A-M-SOF !UR!RR; /ORPORA-IO

mfrd - burberry

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