HND商务会计高级outcome345报告答案.docx
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HND商务会计高级outcome345报告答案.docx
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HND商务会计高级outcome345报告答案
Indexpage
Indexpage………………………………………..….
Introduction………………………………………….
Background………………………………………..…
Findings
Section1…………………………………………
Section2…………………………………………
Section3…………………………………………
Conclusion…………………………………………..
Reference…………………………………………….
Introduction
Background
SSPplcisacompanyoperatinginthefoodmanufacturingindustry.Itisengagedinfoodprocessing,supplyingallthemainsupermarketchainswithfirstclassprocessmeatproducts.DuringthelastfewyearsthecompanyhasbeendifficultbecauseoftheBSEandFootandMouthdiseasemadeadecliningdemandformeatproduct.Thebadoutstandingachievementstoppedin2004andapartialreboundinthemarketproducedanincreaseinturnoverbynearly15%.ItisexpectedthatthisreboundinthemarketwillgathermomentumoverthecomingyearandtheSSPplcisplanningtotakeevengreaterstridesforwardbyopeninganewprocessingplantinGlasgow.
Asrequestedinthechiefexecutive’smemoof30December,hereismyreportsummarisingandanalysisingthefinancialpositionoftheSSPplcfortheyear2003and2004.
Outline
Themainbodyofthereportwillevaluatefiveparts:
Part1---Analyzetheusersoffinancialinformationandthepurposeofusing.
Part2---Stateoffinancialsourceandcategorizewiththeircharacteristics.
Part3---ExplainthecashflowstatementofSSPplc.
AnalyzetherecentfinancialperformanceandpositionoftheSSPplc.
(Includingmyrecommendationsabouthowtoimprovementofbusinessperformance)
Findings
Section1.Usersoffinancialaccounts.
Usersoffinancialstatementsareagroupofpeopleororganizationswhousetheinformationtomakeevaluationsanddecisions.Usersoffinancialinformationcanbedividedintotwocategories:
internalandexternalusers.
Now,Iwilluseatabletoshowyoutheusers’purposeandsourcesofinformationtheyusetogetthestatements.
Section2.Sourceoffinances
Torunabusiness,organizationsrequirefinancefordifferentproposesandforvaryinglengthsoftime.Inthefinance,wedividesourcesofcapitalintotwocategories:
equitycapitalandloancapital.Equitycapitalisthefinanceprovidedbytheownerandthereisnointeresttopay.Loancapitalreferstomoneythatisborrowedfromasourceoutsidethebusiness.Theinterestofloancapitalmustbepaid.Sourcesoffinancescouldbeclarifiedintoshort,mediumandlongterm.Theshort-termreferstofinancethatareborrowedforaperiodofnomorethanoneyear.Themedium-termreferstofundsthatareborrowedforaperiodofbetweentwoandtenyears.Long-termreferstofundsthatareborrowedforaperiodofmorethantenyears.
Inthecasestudy,thesourceoffinancesofSSPplcis:
tradecreditors,tax,bankoverdraft,debentures,ordinarysharecapitalandtheretainedprofitsfromlastaccountperiod.
Short-termsources:
1.Tradecreditors:
Tradecreditorsareproducedwhenthepurchaseofrawmaterialsorstockisdelayingtopay,thus,thereismorecashwhichwouldbeusedforotheruses.Thereisalsoaninterestfreewayofraisingfinance.However,thecreditcouldleadtopoorrelationswithsuppliersandthecustomersmayforfeitdiscounts.
Thecreditis£544,000in2003anditdecreasedto£405,000in2004.Thepercentageofdecreaseis25.56%.ThedecreaseofcreditinfersthatSSPplchasagoodfinancialsituationthatithasastrongabilitytopaycreditsbacktosuppliers.Thiscouldimprovetherelationshipwithsuppliers.
2.Bankoverdraft:
Bankaccountholderscanprearrangewiththebanktodrawchequestoagreatervaluethantheactualbalanceintheaccount.Interestshouldbepaidbycustomersandbankchargeswillapplywhereanoverdraftlimithasbeenexceeded.Bankoverdraftisflexibleandcheap.Ithasalowcost.Somesmallbankoverdraftevenhasafreeofcharge.
SSPplchadnooverdraftbutthenumberincreasedto£86,000in2004.TheincreaseshowsthatthecompanyborrowedmoneyfrombankforitsexpansioninGlasgow.
Long-termsources:
1.Debentures:
Debenturesareloansmaketocompaniesthatcarryafixedrateofinterest.Thecompany’sfixedassetsnormallysecuredebentures.Debentureshaveafixedtimeperiodoranopentimeperiod.Theshareholdersarenotdebentureholders.Adebentureinterestispaidasanexpensenotanappropriationofprofit.
SSPplchasafixeddebenture(£1,560,000)intheyearof2003and2004.Ittellsusthecompany’sfixedassetsaresteady.
2.Ordinaryshares:
Ordinaryshareholdersreceivingpay-outsfromcompanyafterpreferenceshareholdersarepaid.Ordinarysharedividendsarenotfixedandsubjecttocompany’speriodicalperformancesanddecisionsofmanagementinpayingdividend.
InSSPCompany,theordinarysharecapitalis£1,950,000inboth2003and2004.Itinfersthatthecompanyhasasteadyoperationsituation.
3.RetainedProfits
Theretainedprofitisthefinancebroughtfromthelastfinancialperiod.Itisnotfixedandmaybeanegativenumber.Itpresentsoperationalsituationoflastperiod.
Theretainedprofitsdecreasedfrom£505,000to£420,000.Thepercentagechangeofdecreaseis16.83%.Thelowerratioshowsusthecompanyhadmadefewerprofitsin2003thenitwasin2002.
Section3.RatioAnalysis
1.MajorinflowsisNetcashflowoperatingactivatesof£1,345,000.
MajoroutflowisPaymentstoacquirefixedassets,whichtakes£984,000.
2.RatioAnalysis
ProfitabilityRatios:
✧GrossProfitPercentage=Grossprofit/Turnoverx100%
2003:
GPP=£7,000,000/£11,674,000x100%=59.96%
2004:
GPP=£8,037,000/£13,382,000x100%=60.06%
Trend:
Increase
Analysis:
Theincreaseofratioisagoodsign.Thepositivetrendcanbeanindicationthatstockcontrolofmeatproducthasimproved,demandforthemeatproducthasincreasedafterthediseases,orpurchasingpolicieshaveimproved.Themanagersshouldkeepthegoodtrendandgoondevelopit,suchasimprovingmarketingstrategy,settingbetterpricingpolicy,orimprovingstockcontrol.
✧NetProfitPercentage=NetProfitbeforeTaxation/Turnoverx100%
2003:
NPP=£1,182,000/£11,674,000x100%=10.13%
2004:
NPP=£901,000/£13,382,000x100%=6.73%
Trend:
Decrease
Analysis:
Thedecreaseoftheratioisabadsignthatitindicatesalowprofitofthecompany.FromtheP&LAccountoftheSSPplc,weknowthatalthoughthegrossprofitincreased,theoperationcostismuchhigherin2004;itleadstoadecreaseinnetprofit.Sothemanagersshouldthinkabouthowtodecreaseouroperationcosttohelpourcompanyearnmoreprofit.
LiquidityRatios:
✧CurrentRatio=TotalCurrentAssets/TotalCurrentLiabilities
2003:
CR=£1,195,000/£767,000=1.56
2004:
CR=£1,248,000/£701,000=1.78
Trend:
Increase
Analysis:
theincreaseofratioisagoodsign.Generallyspeakingahealthycurrentratioisatleast2:
1.The1.56and1.78indicatethecompanyisalittlebitovertradingandhavedifficultyinmeetingitsshort-termdebts.Themainreasonfortheincreaseistheincreaseinthetotalcurrentassetsanddecreaseinthetotalcurrentliabilities.Isuggestthatthecompanymaykeep
moreprofitfortheshort-termdebts.
✧TheAcidTestRatio=LiquidAssets/CurrentLiabilities
2003:
(£1,195,000-£608,000)/£767,000=0.77
2004:
(£1,248,000-£796,000)/£701,000=0.64
Trend:
Decrease
Analysis:
Thedecreaseisabadsign.Theratioshouldbe1:
1.Buttheratioinbothof2003and2004islessthat1.Andunfortunately,theratioisstilldecreasing.SSPplcmeetsaliquidityproblemthattheliquidassetsdecrease.Thecompanymanagersshouldpayattentiontothisratioandorganization’sdevelopment.
EfficiencyRatios:
✧FixedAssetTurnover=Turnover/FixedAssets
2003:
£11,674,000/£4,017,000=2.91times
2004:
£13,382,000/£4,318,000=3.10times
Trend:
Increase
Analysis:
Wherethisratiogasincrease,thisisagoodsign.Itindicatesthattheexistingfixedassetsaregeneratingmoresalesandmaybeinvestmentinnewfixedassetsgascouldbebeenpaidoff.ManagersofSSPplcshoulddevelopandfocusonit.
✧DebtorsCollectionPeriod=Debtors/Turnoverx365
2003:
£306,000/£11,674,000x365=9.57days
2004:
£452,000/£13,382,000x365=12.33days
Trend:
Increase
Analysis:
ItisabadsignthatthereisanincreaseinDCP.ItindicatesthatSSP’smayhaveapoorcreditcontrolofpoorinvoicingsystem.Thebaddebtsmayalsoincrease.TheleadersofSSPshouldchecktheirinvoicingandremindersystemtokeeptheratioaproperrange.
InvestmentRatios:
✧InterestCover=ProfitBeforeInterest&Tax/InterestCharges
2003:
£1,416,000/£234,000=6.05
2004:
£1,135,000/£234,000=4.85
Trend:
Decrease
Analysis:
Thisratioshowshowcapablethecompanyisofcoveringitsinterestcharges.Thedecreaseisnotgoodbecausethecompanyislessabletomeetitsinterestpayments.Buttheratioisstillinareasonablerange.Leadersshouldtrytoincreasecompany’sprofittokeepthisratioahighlevel.
✧DebtRatio=TotalDebts/TotalAssetsx100%
2003:
(£767,000+£1,560,000)/(£4,017,000+£1,195,000)x100%=44.65%
2004:
(£701,000+£1,560,000)/(£4,318,000+£1,248,000)x100%=40.62%
Trend:
Decrease
Analysis:
Itisagoodsignthattheratioincreased.However,ahealthyratioshouldkeeparound50%.ItindicatesthatSSPhasfewerliabilitiesorkeepsmoreassets.Thesignshouldbekeptbymanagers.
3.Recommendation
AfterreadingandanalyzingthreeaccountsfromSSPCompany,IfoundsomeproblemswithitandnowIwillpresentmysuggestionsaboutthefuturemanagementinthesetwoparts.
Operationalrecommendation
AratioofNetProfitPercentageshowsusthatSSPplchasahighexpenditureinoperationcost.Italsoindicatesthatthecompanyhasalowlevelofcostcontrol.Therefore,IsuggestthatSSPshouldtrytodecreasethecostsofsalesandtheop
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