Financial Performance Analysis of Xolani Ltd.

This document provides an analysis of the financial performance of Xolani Ltd. for the year 2020. It includes the statement of profit and loss, balance sheet, and key financial ratios. The analysis highlights the changes in assets, liabilities, and financial health of the company. The document also discusses the purpose of criminal and civil law, elements of a valid contract, and types of discriminatory conduct. Additionally, it covers the narrower and broader definitions of corporate governance and different opinions of auditors.

BUSINESS MANAGEMENT
ACCOUNTING

TABLE OF CONTENTS
QUESTION 1...................................................................................................................................3
QUESTION 2...................................................................................................................................4
QUESTION 3...................................................................................................................................4
QUESTION 4...................................................................................................................................6
QUESTION 5...................................................................................................................................7

QUESTION 1
Statement of Profit and Loss of Xolani Ltd. for the year ended 31st december2020
Particulars Amount
Sales Revenue 5575000
COGS
Opening inventory 753000
Purchases 2235000
Closing inventory 557000
Gross Profit 2030000
Expenses
Administrative expenses 1378000
Distribution cost 389500
Rent 40000
EBITD 222500
Interest on loan 8000
EBTD 214500
Corporate tax @20% 42900
EAT 171600
Ordinary Interim Dividend paid 190000
Net Earnings/Loss -18400
Balance Sheet of Xolani Ltd. as at 31st December 2020
Particulars Amount
Assets
Non-Current Assets
Office Equipment 2200000
Vehicles 200000
Non-current investments 150000
Current Assets
Receivables 1990000

Less: Allowance for receivables 88000 1902000
Prepaid rent 20000
Bank 390000
Suspense account -1105400
Total Assets 3756600
Equity and Liabilities
Equity
Ordinary shares (nominal value £1 per share) 1000000
Retained earnings 1680000
Net Earnings/Loss -18400
Liabilities
Non-Current Liabilities
8% 10-year bank loan 1000000
Current Liabilities
Payables 95000
Total Liabilities 3756600
QUESTION 2
With the help of the financial performance statement of company it is clear that the total
asset and liabilities have reduced in 2020 as compared to 2019. This is majorly because of the
reason that in asset some of the current asset has reduced like bank, receivable, inventory and
others. In addition to this in liabilities side the payables have been reduced to a great extent and
because of these total liabilities decreased. Hence, it can be stated that the financial performance
of the company is improved as much of the liabilities have been paid off.
QUESTION 3
A
Return on capital employed- EBIT/ capital employed
Receivable collection period- (average account receivable / sales) * 100
B
Particular 2020 2019

Return on capital
employed ratio
2020 2019
EBIT 1259860 647583 0.2 0.2
Capital employed 5166388 3329300
Total asset- Current liability
2020- (5470097- 303709= 5166388)
2019- (3511537-182237= 3329300)
Particular 2020 2019
Receivable collection
period ratio
2020 2019
Average account
receivable
142928 64500 21.3 16.2
Sales 2443258 1455265
C
Debt ratio= Total debt/ total asset
Gearing ratio- EBIT/ total interest
D
Particular 2020 2019
Debt ratio 2020 2019
Total debt 1800000 870000 0.3 0.2
Total asset 5470097 3511537
Particular 2020 2019
Gearing ratio 2020 2019
EBIT 1259860 647583 9.9 14.9
Total interest 126000 43500
E
By referring to the financial ratios and statement it is clear that company has to be concerned
relating to the financial health of the company. this is particularly because of the reason that

when the debt ratio has increased and this implies that company is complying with more of debt.
In addition to this gearing ratio has decreased and this reflects that more interest is being paid
and this decrease the profit.
QUESTION 4
Part 1
A
The major purpose of criminal law if to deliver justice to all the individual who are
suffering any problem. This law is majorly build because of the reason that under this law the
guilty is punished and this assist in stopping the offending and protect the innocent person. On
the other side, major purpose of the civil law is that this is a law which aims at solving the
disputes among the individuals or the companies. There are many different types of dispute
which take place among the employees with the company, tenant with home owner and many
other different types of the dispute which may occur at any time. Hence, for solving the dispute
among the two parties use of civil law is being undertaken.
B
A valid contract is being defined as the contract which involves the three major elements that is
an agreement including valid offer and acceptance. Along with this there is an intention present
in both the parties to create a legal relation and appropriate consideration is present to both the
parties.
C
i. Under the contract between Marsha and antique dealer to sell the clock for £2750 is
voidable because of the reason that information provided by Marsha was wrong. This is
particularly because of the reason that Marsha communicated that clock is from 18th
century but when antique dealer checked the product he found that it is from mid- 20th
century. Hence, as the information supplied is wrong so the contract will be voidable.
ii. After knowing the fact that the information supplied relating to the product was wrong,
Marsha apologized from the antique dealer. Further the dealer refused to buy the product
at the decided price that is £2750 but can buy it at £500. This can be a justified response
of the antique dealer as with repsect to the time the worth of the clock has reduced. The
legal effect in this situation of response of dealer can be that if Marsha feels the value to
be worth then they can come in contract again with consideration value of £500.

Part 2
A
i. The two type of discriminatory conduct along with example are as follows-
 Direct discrimination- this is a type of discrimination wherein the person is treated less
than the other people may be because of the reason that they are having some disability or
any other basis in which they are less than other people. The example of direct
discrimination is that an employee is not offered promotion opportunity as she is a
woman.
 Indirect discrimination- this is a type of discrimination which occurs when the rules of
terms and condition apply to a particular group but in practice they are less fair. For
example, a company advertises for recruitment for marketing person and mention that
they must have 12 years’ experience. Then it implies indirect discrimination with people
who have interest in job but does not have minimum experience of 12 years.
ii. Two action which employment tribunal can take if employee makes a claim for
discrimination within three months is that
 The tribunal can make the employer pay the compensation.
 They can recommend the employer to change the policy so that discrimination is not take
place in future.
B
1. The example of business efficacy is the duty of mutual trust and confidence as without
this the implied term cannot be made.
2. The example for this is that when anything is being stolen from the employer then it is
obvious term that this need not be expressed in written format.
QUESTION 5
A
The narrower definition of corporate governance is defined as a major focus on
controlling the management by the shareholders only. On the other side, the broader definition is
referred to as looking at the role of stakeholders in managing and taking the strategic decision
within the company for its betterment and development. The major three purpose of companies
within the society involves increase in profit, sustainable and long term return and satisfying
need of consumers. The narrower and broader definition of the corporate governance relates with

these three purposes of company. this is particularly because of the reason that corporate
governance involves the rules and regulation within the company which employees need to
follow. Hence, when the corporate governance will be complied in proper and effective manner
then this will result in attainment of all purpose of company.
B
 Qualified opinion- it is referred to as the opinion of auditor which states that financial
information
 n is being present in correct and fair manner.
 Adverse opinion- this is defined as opinion of auditor which reflect that financial
statements are misinterpreted and misstated.
 Disclaimer of opinion- it is a report which means that auditor is distancing themselves in
providing any opinion relating to financial statement of the company.