Financial Analysis of Just Eat PLC

This assignment involves a detailed analysis of Just Eat PLC's financial reports for the years 2017 and 2018. It examines the company's income statement and cash flow statement, highlighting key trends and statistics. The report also discusses the accounting concepts used by the company, including historical cost and going concern concept. A conclusion is drawn based on the analysis, providing insights into the company's performance and potential future strategies.

Finance in
Management and
Leadership

Executive Summary
This report is based on Finance in Management and Leadership, where finance is the
most necessary part in any business organisation as all the functions and operations in an
organisation needed funds. Finance department helps in the organisation to manage its funds in a
proper manner which helps to grow business in a effective way. In management and leadership
finance plays a vital role as finance is needed at every single point in the organisation. In the
purpose of finance Just eat PLC has been taken as an organisation which uses financial
information to identify and make different or unique strategies which is needed through an
organization to live in the market. According to this financial system, organisation follows lot of
tasks such as users interested in acquiring financial information along with this, several types of
financial data and information necessary for decision making in current organisation. Apart from
this, communication of financial information with all organisational stakeholders and
Comparison of various types of financial statements and accounting concepts and framework
used in a proper way.
Findings: It has been concluded the balance sheet profit and loss or cash flows are related
with each other because changes in present assets and current liabilities on the balance sheet are
related with revenue and cost on the income statement but it is required to focused on the cash
flows statement to point out the actual amount of cash received through the business. That's why
Just eat PLC used these aspect of finance are related with each other.
Table of Contents
INTRODUCTION ..........................................................................................................................1
TASK 1............................................................................................................................................1
Users interested in receiving Financial Information .............................................................1

TASK 2............................................................................................................................................2
Communication of financial information with all organisational stakeholders.....................2
TASK 3............................................................................................................................................3
Different types of financial data and information required for decision making in
contemporary organisation.....................................................................................................3
TASK 4............................................................................................................................................4
Comparison of different types of financial statements and the appropriate types of accounting
concepts and framework used................................................................................................4
in producing them..................................................................................................................4
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Finance is the most important part in any business organisation as all the functions and
operations in an organisation requires funds (Bovaird and Löffler, eds., 2015). The finance
department helps the organisation to manage its funds and properly invest it in the activities that
will help to grow their business and compete in the market. In management and leadership
finance plays an important part as finance is required at every stage in the organisation. In order
to start any business finance is the first thing which is required and to be managed. Finance helps
in management to give the clear picture and develop new strategies to overcome the barriers and
in leadership it helps them to see the actual position of the organisation and work according to it.
TASK 1
Users interested in receiving Financial Information
Financial information are the information about the company's financial health which is
required by the management and the investors to know that how the company is doing and what
should be the new strategies that should be used to stay in the market and earn the maximum
profit (Hoye and et. al., 2012). Investors also use the financial information to see the return
which they can get and how much and where they should invest. Financial information includes
the statement of profit and loss, statement of balance sheet and cash flow statements, these are
used by both management and the investors before investing or making new strategies which can
help the organisation to grow and earn maximum profit. Stakeholders are the person, group or an
organisation that may have the interest in the organisation which may affect the business and
without their support it is impossible for the organisation to stay in the market.
Stakeholders that are interested in receiving the financial statement are the:
Primary Stakeholders: Primary stakeholders are mainly the internal stakeholders which have
the direct interest in the organisation and also deal with suppliers, customers, creditors,
employees etc (Middlehurst, 2013).
 Managers: Managers of the Just Eat PLC uses the financial information to analyse
and make new strategies required by the organisation to survive in the market.
Financial Information show the actual position of the company and helps the
managers to formulate new and better strategies.
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 Employees: Employees of Just Eat PLC working in the finance department uses the
Financial Information to prepare the Financial Statements required by the lop level
management to analyse the growth of the company and also to compare it with the
competitors.
1. Secondary Stakeholders: Secondary stakeholders are the external stakeholders which
have invested their money in the organisation and are affected by the actions. Secondary
stakeholders include General public, activist group, investors, etc.
 Investors: Investors of the Just Eat PLC are mainly the equity share holders which
needs the financial information to see the growth of the company and earning per
share for which they have invested. Financial information provides the details that at
what rate the company is proving the dividend.
 Suppliers: Suppliers of the company need the financial information to check the
creditability of the organisation to lend the goods on the credit basis and to reinvent
their credit policies against the organisation. Suppliers of Just Eat PLC have shown a
growth which shows the creditability of the company.
TASK 2
Communication of financial information with all organisational stakeholders
Organisational stakeholders are the stakeholders which require the financial statements to
analyse the growth of the company (Morsing and Oswald, 2009). Internal stakeholders include
Managers, Employees, and all the other people working inside the organisation. Financial
information is required by all the internal stakeholders such as managers, they use these financial
information to formulate the strategies for the organisation to help them to achieve greater
results. External stakeholders include the shareholders, government, creditors, customers, etc.
The financial information is communicated with organisational stakeholders in different ways,
for internal communication it uses formal communication channels or informal communication
channels. Formal communication is the way by which the information is transferred formally
within the organisation in a systematic way such as from top level to middle level and then to the
lower level of management and vice versa. For external stakeholders company uses the way of
publishing the annual reports consisting of all the financial information on the websites and
publishing it in the office journals and magazine. These are some type of ways of communication
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of the financial information to the organisational stakeholders. For internal stakeholders the
company uses the formal ways of communication in which the company share its financial
information with the employees and the managers in annual general meeting.
Just Eat PLC share its financial information in the annual report which they publish it on
their website. They provide the financial statements in the annual report under the heading of
financial statements in which it has the sub heading as follows:
 Independent auditor,s report: This heading shows the Audit report which is created by
the auditor after the analysis and the preparation of the accounts by the Chartered
Accountants of the company. This highlights all the necessary information related to the
accounts and the analysis done by the experts.
 Income statement: This income statement shows the ways by which the company has
earned his revenue and what the profit of the organisation is. The investors to see the
growth of the company and the earning per share value of the company so that investors
invest in the company use this.
Balance sheet: The balance sheet shows the financial position of the company which is required
by the company's suppliers to check the creditability and the growth of the organisation so that
the money is not stuck or goes to bad debts (Renz, 2016).
TASK 3
Different types of financial data and information required for decision making in contemporary
organisation
Financial data and information has an important role in the process of decision making as
these data shows the actual position of the company (Schaltegger, Burritt and Petersen, 2017).
Financial statement is made to record the daily transactions in the business which shows that
how the company is growing and helps them to take the necessary decisions. Financial
information, which is required to make business decisions, includes the income statements,
balance sheet and the cash flow statement. The top level of management analyse these data and
make the decisions which will help the organisation to do better. In financial statements
management uses the previous data and current data to see that their decisions are good for the
organisation or not.
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Information regarding the key ratios is required by the management to take necessary
decision. Just Eat PLC also uses these information to take decisions. Ratios gives the percentage
increase or decrease and is easy to interpret the data. Following ratios are used to make the
decisions in an organisation:
 Liquidity Ratio: Liquidity ratios measures the company's ability to pay their current
liabilities. Liquidity ratios show the percentage of assets which can be converted in to
cash within one year.
 Leverage Ratio: Leverage ratio shows that how the company is financed by its creditors
resources. It gives the company the picture that how much the company is owed to its
creditors.
 Profitability Ratio: Profitability ratios shows the company efficiency and the return on
the invested capital. This shows that how the company is doing and at what margin the
company is in profit or loss.
 Activity Ratio: Activity Ratio show the efficiency of the company in utilizing their
resources efficiently. If the efficiency ratio is high it means that the company is not
wasting its resources and utilizing it efficiently.
These information is used by the top level of management in Just Eat PLC to make the decisions
and take necessary steps which is required to stay and have a competitive advantage over its
competitors. Management uses the liquidity ratio to check its liquidity, the ability to pay off its
current liabilities and converting its current assets in cash within one year (Schild, 2013).
Leverage ratio is also used to find out the amount which is financed by the creditors. Cash flow
statement is used by the company to keep the track on the use of cash and take the decision is
minimizing the use of cash and other expenses. The income statements shows the actual income
of the company and the expenses where the company can work upon to reduce the cost and
maximize its profit.
TASK 4
Comparison of different types of financial statements and the appropriate types of accounting
concepts
Financial statements are produced to show the actual position of the company. Financial
statements include:
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 The Income Statement (profit and loss): The income statement shows the actual
income earned by the company in an accounting period. It shows the actual profit earned
and expense incurred by the company in an accounting period.
Advantages:
1. It provides the detail information of company's revenue from operations and all
expenses incurred during an accounting period.
2. For investors it provide the detail information about the company's profit and earning
per share.
Disadvantages:
1. The data presented in the Income statement is misrepresented as it show the liabilities
as an expense which is not yet paid by the company
2. The data in the income statement does not show the expected growth of the company
in future.
(Source: Annual Report of JUST EAT. 2018)
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Interpretation: According to the above given information, it is analysed that company
was facing a huge loss in the year 2017 of £103.5 million but at the end of the year 2018 the
company showed the profit of £79.9 million which shows that the company did better in the year
2018 and continues to do better in the near future. Earnings per share for the year 2017 was
negative 15.2(pence) but in this year new strategies was formulated to help the company achieve
the profit and earning per share in 2018 was 12.1 (pence).
 The Statement of Financial Position (balance sheet): The statement of financial
position also known as the balance sheet of the company shows the financial position and
the net assets and liabilities of the company, which helps the managers to know the actual
position and their assets to meet their liabilities.
Advantages:
1. It shows the trends when compared with the previous years balance and also helps the
company to maintain its accounting equation.
2. Balance sheet ratios helps the investors to check the company's liquidity and other
ratios to check the growth of the company.
Disadvantages:
1. It shows the long term assets which are misstated as it is shown at the price at which
it was purchased and is expected to last for more than one year.
2. It only shows the assets which can be expressed in the monetary term, missing some
of the valuable assets.
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Interpretation: From the above given balance sheet of Just Eat PLC it is interpreted that the
company's financial position is good in the year 2018. In the year 2017 total assets recorded by
the company was at £726.7 million in 2018 assets increased to £801.9 million and the liabilities
of the company also grown to £431.8 million as compared to the previous year at £288.0
millions. As per the given information the goodwill of the company also increased to £770.7
million in comparison with the goodwill of the year 2017 which is marked at £544.9 millions.
 The Statement of Cash Flow: Cash Flow statement are the statements which shows the
inflow and the outflow of the cash from the company. This statements only record the
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uses of cash and cash equivalent during the accounting period, all non cash expenses are
added back to the profit to find out the actual cash used or inflows in the year.
Advantages:
1. It helps the organisation to analyse and the projected cash flow statements helps the
company to control and plan for the future financial operations.
2. It helps the company to see the actual liquidity position which P&L and fund flows
fail to show.
Disadvantages:
1. It does gives the actual position of the company as it only shows the cash related
transactions and non cash expenses are added back to it.
2. To prepare the cash flow statement company needs the balance sheet and income
statements.
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Interpretation: From the above given information it can be interpreted that net cash at the end
of the year 2018 is decreased to £185.9 million as compared to the year 2017 at £265.1 million.
In the year 2018 the cash borrowed is stated at £185.0 million.
Accounting concept used by Just Eat PLC in producing these financial statements are as
follows:
 Historical Cost: When the assets acquired by the company is recorded on its nominal or
original cost on the balance sheet then it is assumed that the company follows the
historical cost methods for the calculation of its assets.
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 Going Concern Concept: The going concern concept says that the company will not end
its business in the near future it is amused that the operations will be continued for the
long term. This concept defines the method of recording assets as Fixed assets (long
term) and current assets (short term).
CONCLUSION
From the above report it has been analysed that the company Just Eat PLC was facing the
loss in the year 2017 but in the year 2018 the company showed a profit of £79.9 million. The
above reports helped in understanding the uses and importance of financial information required
by the management to make the necessary decision and formulate strategies according to the
financial information provided by the finance department.
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REFERENCES
Books and jourals:
Bovaird, T. and Löffler, E. eds., 2015. Public management and governance. Routledge.
Hoye, R. and et. al., 2012.Sport management. Routledge.
Middlehurst, R., 2013. Changing Internal Governance: Are Leadership Roles and Management
Structures in U nited K ingdom Universities Fit for the Future?. Higher Education
Quarterly. 67(3). pp. 275-294.
Morsing, M. and Oswald, D., 2009. Sustainable leadership: management control systems and
organizational culture in Novo Nordisk A/S. Corporate Governance: The international
journal of business in society. 9(1). pp.83-99.
Renz, D. O., 2016. The Jossey-Bass handbook of nonprofit leadership and management. John
Wiley & Sons.
Schaltegger, S., Burritt, R. and Petersen, H., 2017. An introduction to corporate environmental
management: Striving for sustainability. Routledge.
Schild, J., 2013. Leadership in hard times: Germany, France, and the management of the
Eurozone crisis. German Politics and Society. 31(1) pp.24-47.
Swift, L. and Piff, S., 2014. Quantitative methods: for business, management and finance.
Online
Annual report of JUST EAT. 2018. [Online]. Available through: <
http://www.annualreports.com/Company/just-eat>.
Macmillan International Higher Education.
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