Financial Accounting Coursework on ASOS PLC and Giorgio F PLC

`
AC4052QA Financial Accounting – APR22INTAKE
Assessment Component: Coursework
Weighting: This Coursework contributes 100% to the Overall Module Mark
Word count (1500 words Max): Section A 1200 words(max) and Section B 300 words(max)
Submission: Students to submit to Turnitin via module Weblearn
Deadline: Monday 25 July 2022
INSTRUCTIONS:
This coursework has two sections. Section A has ONE question and Section B has TWO questions.
1. Answer all question
2. Show all working out.
3. It is mandatory to use the template provided
4. You must show all working out. You may use Excel, but you must show the formula for the excel calculations
1

SECTION A [30marks]
QEUESTION 1
This assignment requires each student to work on the published financial statements of ASOS PLC for two years from
2020 to 2021.
You are required:
Write a brief report on the performance of ASOS over the financial periods 200 to 2021.You should use the financial
statements provided below to calculate the required accounting ratios shown below and use any other information
relevant to ASOS PLC for your comments. Information can be accessed from the annual report and accounts and any
other source of evidence that you believe helps to explain the company’s performance and position. (30Marks)
Calculate ratios from ASOS 2020 and 2021 annual reports and
comment on the comparative performance
ASOS year end 31 August 2020-21
Key figures for use in ratios (all figures in £m)
2021 2020
Income statement £m £m
Sales revenue 3,911 3,264
Cost of sales 2,134 1,716
Gross profit 1,776 1,547
Operating profit (use for PBIT) 190 151
Interest paid 13 10
2021 2020
Balance sheet £m £m
Non-current assets 1,325 970
Current assets 1,560 1,020
Inventories 807 532
Trade and other receivables 58 60
Current assets less inventories 753 487
Current liabilities 998 818
Trade and other payables 956 770
Non-current liabilities 1,034 810
Total equity 1,034 810
Capital employed 2,068 1,621
2

SOLUTION: A1
2021 2020
Ratios: [9marks]
Profitability
Return on capital employed
EBIT * 100 /
Capital
Employed
= 190 *
100 /2068
= 19000 /
2068
= 9.18
EBIT *
100 /
Capital
Employed
= 151 *
100 /
1621
= 15100 /
1621
= 9.31
Net profit margin
Net Profit *
100 / Sales
= Net profit
= 190 – 13 =
177
= 177 *
100 / 3911
= 17700 /
3911
= 4.53
Net Profit
* 100 /
Sales
Net profit
= 151 –
10 = 141
= 141 *
100 /
3264
= 14100 /
3264
= 4.31
Asset turnover
Sales / Total
asset
Total Asset =
FA+CA
= 1325 +
1560 = 2885
= 3911 /
2885
= 1.36
Sale /
Total
Assets
Total
Assets =
FA + CA
= 970 +
1020 =
1990
= 3264 /
1990
= 1.64
Comments
In 2021 the return on capital employed is better than in year 2020 because in year 2021 the company earn more profit
compare than 2020 is (£m) 39 and the capital employed is also more than in year 2020 is (£m) 447
Net profit margin is more in year 2021 as compare to in year 2020. The net profit is year 2021 is (£m) 177 and the year
2020 is (£m) 141.
Net profit means operating profit minus interest and other expenses. In year 2021
net profit 190-13 = 177 and the year 2020 net profit is 151 - 10 = 141.
Assets turnover ratio is better in year 2020 as compared to year 2021 because in
year 2021 asset is 2885 and in year 2020 the total assets is 1990 and sale is 3264.
Working capital: [9marks] 2021 2020
Inventory days
Average
Inventory *
365 / COGS
Average
Inventory =
(Opening +
Closing
Stock) / 2
(532 + 807) /
2 = 669.5
= 669.5 *
365 / 2134
= 115 days
Average
Inventory
* 365 /
COGS
Average
inventory
= (0 +
532) / 2
= 266
= 266 *
366 /
1716
= 57 days
Receivable days
Average
account
receivable *
365 /
Average
daily credit
sales
= 59 * 365 /
3911
= 5.5 days
Average
account
receivable
* 366 /
Average
daily credit
sales
= 60 *
366 /
3264
= 6.71
days that
is 7 days
Payable days
Average
Account
payable *
365 / COGS
= 863 *
365 / 2134
= 148 days
Average
Account
payable *
366 /
COGS
= 770 *
366 /
1716
= 164
Days
Comments
From the above calculated ratios it can be concluded that the company are very
less as compared with the company’s payable days, which shows that the
3