logo

Accounting and Decision Making Assignment

   

Added on  2019-12-03

11 Pages3061 Words140 Views
ACCOUNTING ANDDECISIOSN MAIKNG

TABLE OF CONTENTSIntroduction......................................................................................................................................3Part 1................................................................................................................................................3Business performance analysis...............................................................................................3Interpretation of profit and loss statements............................................................................3Market Segment Analysis.......................................................................................................4Cash flow statements..............................................................................................................5Liquidity and Working Capital...............................................................................................5Solvency.................................................................................................................................6Part 2: Investment appraisal.............................................................................................................6Sources of internal finance.....................................................................................................8Part 3: Formal business report.........................................................................................................8Conclusion.....................................................................................................................................10References......................................................................................................................................11INDEX OF TABLESTable 1: Analysis of firm cash flow.................................................................................................4

IntroductionAccounting of all the business transactions plays a very important role in identifying thebusiness results. Moreover, it helps the managers to take effective business decisions. Bertie Plcis UK food and Grocery Company that established in the year 1945 that operates in distinct partover the world. It mainly operates in Europe, Asia and US through selling food, clothes and otherhousehold products. The present report will helps in analyzing the business performance throughits financial statements. Further, distinct types of investment appraisal techniques that help totaking effective investment decisions will also discuss in this report. Part 1Business performance analysisDifferent types of statements can be analyzed for assessing the business performance thatis explained here as under:Interpretation of profit and loss statementsIncome statement is prepared to determine business operational result in terms of profitor loss. It includes the business trading transactions and other direct as well as indirect expenses.Profitability ratio helps to interpreting the profits or loss of Bertie plc Company. Gross profit ratio: It is concerned with calculating the percentage of gross profit on totalbusiness sales (Gross profit ratio. 2015). In the year 2014, the gross profit ratio was8.44% decreased to 6.31% in the following year. The reason behind such decreases is thatBertie plc sales declined by 1.4% from 63916£ to 64826£. Moreover, the company costof sales gets increased by 3.79% higher than percentage decrease in sales. Therefore, itshould be advised that business has to improve its profitability through increasing therevenue and decrease in cost. Net profit ratio: In the year 2014, Bertie Plc net margin was 6.75% get declined to4.08% in next year. The reason behind such decreases is the administration cost and grossprofit of the company gets inclined. Further, finance cost of the company also getsincreased to 687£. Therefore, it can be said that operational performance of the businessgets declined over the period. Thus, Bertie Plc Company should incline the sales andreduce its expenditures so as to get better operational results. It can be done throughproviding better quality of services at reasonable rates.

Return on capital employed: In the year 2014 ROCE was 14.81% get declined to 7.06%in the year 2015. It is because of decreased net profits of the company. Further, thecapital employed in the business get inclined from 29148£ to 37505£. It gets increased by28.67% in the year 2015. On the basis of above information it can be said that Bertie Plc business performance getsdeclined in the year 2015. Therefore, company should increase its revenues and reduce itsexpenditures so as to improve its profitability.Market Segment AnalysisAlong with the UK market, Bertie Plc Company operates in US market also. Theperformance of the US segment can be analyzed with the other segments through differentfactors. The US Segments operational results are not very good then compare to the otherbusiness segments. The three important reasons for such analysis are explained here as under:Fierce competition: The level of competition impacts the business performance to agreat extent (Brealey, 2012). In US market various opportunities are available to the retailsector companies. Thus, it attract new entrants into the market create higher level ofcompetition. The company is facing competition from other strong companies such asWalmart. It is a US leading company in food and retail sectors. Therefore it is importantfor the company to compete from its competitors very effectively. They compete forgrab larger the market share through increasing its revenues. Decreasing the net margin:The US segments sales increased from 1392£ to 2946£ andcost of sales get inclined to 1348£ to 2842£. The business sales and cost of sales getinclined by 110.83% and 111.638%. Therefore, the profitability of the company shows alittle increase from 3.16% to 3.53%. However, the company is having negative net profitsbecause of higher the expenses from 152£ to 301£. However, the rest of the world grossprofit and net profits are 9.09% and 6.12% in the year 2015. Thus, it is also a reason forlowering the business performance. Assets and Liabilities: The excess of US commercial property for sales results in fallingthe prices (Petersen, 2009). For instance, Bertie plc property worth £10.25m disposedonly at £4.5m.Further, the excess of current liabilities to the current assets also is a reasonfor worst business performance. Therefore, it should be recommended that Bertie Plc hasto improve its current assets through making effective business planning.

End of preview

Want to access all the pages? Upload your documents or become a member.

Related Documents
Bertie plc's financial performance in 2015
|12
|3104
|190

BUSINESS PERFORMANCE ANALYSIS AND DECISION-MAKING INTRODUCTION
|11
|3431
|131

Business Performance Analysis
|9
|3066
|149

Bertie plc: a global retail company operating in Europe, Asia and US
|13
|3425
|120

Financial Decision Making: Assignment
|16
|4244
|59

Accounting and Finance Assignment - H&M
|13
|2965
|155