Bertie plc's financial performance in 2015
Added on 2019-12-03
12 Pages3104 Words190 Views
Accounting and DecisionMaking
EXECUTIVE SUMMARYThe business decision making is identified as the most crucial part of businessmanagement. The profit value of Bertie plc is reduced in 2015. The gross profit ratio of 2015 and2014 is respectively 6.31% and 8.44%. This aspect shows that there is decline of 2.13% andalong with this net profit of business is reduced by 2.67%. Moreover, liquidity ratios have shownnegative trends that indicates reduction in liquidity position of firm. Further it has been analyzedthat business entity has recorded growth in revenue of company in US market so as gross profitpercentage is increased in US that is increased to 3.53% from 3.16% of 2014. But, in UK andrest of the world, company is facing reduction in gross profit margin which is decreased to6.31% in 2015 from 8.44% of 2014. In addition to that investment approaches such as NPV, IRRetc. has played important role in evaluation of profitability of investment.
TABLE OF CONTENTSPART 1: BUSINESS PERFORMANCE ANALYSIS....................................................................4Interpretation of the Statement of Profit or Loss ........................................................................4Market Segment Analysis............................................................................................................5Statement of Cash Flows.............................................................................................................6Liquidity And Working Capital...................................................................................................6Solvency.......................................................................................................................................7PART 2 ...........................................................................................................................................8Investment Appraisal...................................................................................................................8Sources Of Internal Finance.........................................................................................................9REFERENCE ................................................................................................................................11
PART 1: BUSINESS PERFORMANCE ANALYSISInterpretation of the Statement of Profit or Loss Sales revenueIt can be interpreted that the revenue of Bertie plc is increased by 1.42%. This thingreflects increment in sales of company. On the basis of these data, it can be stated that businessentity has identified positive trend in revenue in 2015 as compared 2014. This thing reflects thatorganization is managing appropriate growth due to company is expanding business in newoverseas market. The reason of increase in sale is increase in demand of different goods andservices in all over the world. Cost of salesThe comparison of increment cost of sales with increment in sales volume has found thatcost of sales in 2015 is much higher than 2014 by 3.79% which have reduced the gross profitmargin. The increase in cost of raw material has led negative impact on the profit generationcapabilities of organization. There is increase is cost because of global recession in economy.This aspect had made increase in cost of fuel charges, transportation and basic raw material.OverheadsBy considering financial data of the company, it can be said that there is increase infinancial and administrative cost of business. Increase in overhead is due to the increase in longterms borrowings and noncurrent assets of the business. The long term borrowing has enhancedcost of finance that has created significant impact on net profit of company.ProfitabilityAs per the Profit and Loss statement, the gross profit ratio of 2015 and 2014 isrespectively 6.31% and 8.44%. This aspect shows that there is decline of 2.13% and along withthis net profit of business is reduced by 2.67%. Gross profit margin of company is reduced in2015 that indicates increase cost of production and increase in cost of raw material that has ledadverse impact on gross profit of company. Due to this aspect, there is overall reduction inefficiency as net asset turnover ratio is declined by 0.46%. Further, reduction in net profit ofcompany, return of capital employed ratio also determines reduction in profitability or incomegeneration capacity of business entity. Consequently, capital employed has been declined byapproximately 50%. This is because reduction in new profit has reduced the value of return ofcapital employed which is reduced to 7.06% from 14.81%. This evaluation has found that4
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