Financial Analysis of Grenco Plc: Income Statement, Cash Flow, and Balance Sheet

Introduction to Accounting
LDT3106

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Explaining 3 financial statements like balance sheet, income statement and cash flow along
with their linkage with one another........................................................................................1
Calculating the profit and loss of Grenco Plc.........................................................................2
Commenting on the financial aspects of Grenco Plc..............................................................4
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7
APPENDIX .....................................................................................................................................8

INTRODUCTION
Accounting is concerned with the procedure of recording the financial transaction
pertaining to a business. In the current era, having effectual accounting procedure is important
in order to give emphasis about the prevailing transaction so that reliable understanding about
the financial aspects can be derived. The current report is based on Grenco Plc which operates in
retail & general merchandising sector and possess the large market share. The present report will
pay attention on assessing the information provided by balance sheet, income statement and
cash flow along with linkage with one another. It will involve calculation of profit & loss of the
organization so that depth understanding can be derived. Current study will give emphasis on
assessing the financial aspects of the company via conducting comparative analysis.
MAIN BODY
Explaining 3 financial statements like balance sheet, income statement and cash flow along with
their linkage with one another
Financial statements are concerned with recording the monetary transactions conducted
by organization in formal and precise manner so that receiving accurate & reliable information
for making sound decision can become possible (What are the Three Financial Statements?
2022.). There are three main financial statements such as income, cash flow statements and
balance sheet. These statements provide number of information that helps in gaining appropriate
ability to make sound decision.
Income statement is associated with having the information regrading the expenditure
incurred and income obtained for the particular period (Putra, 2019). There is involvement of
both direct and indirect expenses incurred and income earned throughout the particular period.
This specific statement comprises revenue obtained from sales, cost of the goods old, gains and
expenses in terms of both operating and non operating so that overall picture can be covered.
These all provides the ability to user to analyze that firm is generating profitability through
conducting such course of the action. In addition to this, it as well help in ascertaining the reason
behind prevailing profitability & loss so that accurate judgment of financial performance can be
done.
Cash flow statement provides the aggregate data regarding all cash in and out flows
obtaining from different kinds of activities exerted by organization. There are various form of
data that is provided by this particular statement which aids in making sound decision. This
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comprises information regarding cash flows from operation, investing and financing. Users with
help of the cash flow statement can get the different kinds of information in turn such as
verifying profitability & liquidity position, capital cash balance, management, planning &
coordination of cash to achieve the objective of meeting requirements of business (Rosenthal,
2018). This aids in understanding how effectively particular enterprise is receiving cash in & out
flow so that evaluating its financial position can become possible. Ability to ascertain the
liquidity position of particular company can be assessed by this statement.
Financial position is related with getting the summary about the ingratiation's monetary
performance. The current balances of recorded assets, liabilities and equity is involved in the
balance sheet. Financial position of the organization is basically formulated by having
accounting equation which indicate total assets equals to liabilities plus equity. This provides
assistance in gaining the understanding about its efficiency to overcome short term debt with aid
of current assets. Operational efficiency and liquidity can be analyzed by using balance sheet
which helps in making appropriate decision. Asset includes inventory, trade receivable,
property, vehicle, etc. Liabilities include trade payable, creditors, loans, etc. that includes both
short term and longer run debts of enterprise. Equity part of the balance sheet comprises capital,
retained earning, etc. These assist in receiving the reliable information in turn effective
evaluation can be done.
There is significant linkage between the three mentioned financial statements that
comprises income, cash flow and balance sheet. For instance- financial transaction regarding the
debt affect three mentioned statements such as interest expenses. This appears on income
statement, principal amount on balance sheet and in financing section of the cash flow. The
profitability derived from the income statement and cash balance of cash flow statement is
recorded in the balance sheet statement (Aini, Anoesyirwan and Ana, 2020). Purchase and sale
of assets is recorded in both financial position and income statement by specifying its reduction
and h gain or loss if any. On the basis of this example it can be interpreted that there is
significant linkage between these mentioned financial statement. This helps in interpreting
proper evaluation of information that can help in taking relevant decision in turn higher
effectiveness can be obtained.
Calculating the profit and loss of Grenco Plc
Income statement
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