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Financial Performance of Company

   

Added on  2020-10-22

13 Pages2531 Words410 Views
FinancialPerformance
Financial Performance of Company_1
Table of ContentsINTRODUCTION...........................................................................................................................1MAIN BODY...................................................................................................................................1Nature and significance of equity, non current assets and liabilities of the company............1Effect on profit of 10% variation in depreciation...................................................................2Interpretation of cash flow statement.....................................................................................2Analysis of performance of company with the help of ratios................................................2Difference between financial statements of limited company and sole proprietorshippartnership..............................................................................................................................4Commitments of Aston Villa PLC.........................................................................................5CONCLUSION................................................................................................................................6REFERENCES................................................................................................................................7APPENDIX......................................................................................................................................8
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INTRODUCTIONFinancial performance is the measure of financial strength of a company which can beanalysed with the help of annual report or final accounts. For shareholders and stakeholders it isvery important to get exact information of the business entity so that they may examine that theirmoney is effectively utilised or not. In situation of weak financial performance managers andaccountants of the company should take immediate actions like recover owed amount fromcustomers, reduce unnecessary expenses, formulation of new marketing strategies etc. so thatorganisation may improve its performance (Boyd and et. al., 2017). This project report aims atthe measure of financial performance of Aston Villa PLC. Various topics are discussed underthis assignment such as nature and significance of non current assets, equity and non currentliabilities, effect on profit of variation in depreciation, interpretation of cash flow statement ofthe company, ratio analysis to analyse financial statements, the way in which financialstatements and income statements of the company differs from sole proprietorship andpartnership.MAIN BODYNature and significance of equity, non current assets and liabilities of the companyNon current assets: These are the long term assets that are acquired by Aston Villa PLCin order to operate business effectively. Company is having three different types of non currentassets that are tangible fixed assets. These assets are plant and equipments that are used topprovide services to the visitors, motor vehicles used for the same purpose and freehold buildingis used operate all the operational activities and to execute business. All of them have beenchanged with the time. In year 2015 they were £9979713, in 2016 they have decreased up to£9034013 and in 2017 increased up to £9083217. Organisation have suffered financial crisiswhich has resulted in decreased value of assets in year 2016 (Camerinelli, 2016).Non current liabilities: These are also known as long term liabilities that needs to berepay after a long period in future. Aston Villa PLC is not having such type of liabilities in itsbalance sheet. Equity: It refers to the investment of shareholder in the company. Aston Villa PLC ishaving equity in the form of called up share capital. Equities are vary important for the company1
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because it is required to run business and also execute all operations. In year 2015 equities were£84938182 which has not been changed in three years and remain constant (Edwards, 2014). Effect on profit of 10% variation in depreciationDepreciation: It is total decrement in the value of an asset on yearly basis. Changes indepreciation of Aston Villa PLC is shown in below table:YearDepreciation10%increase10%decrease201530235183325870272116620162032922223621418296302017160228317625111442055If the depreciation increases in 2015, 2016 and 2017 than profits will be decreased forAston Villa PLC. In situation of 10% decrement in the depreciation company may increase itsprofits because of the reduction in expenses of Aston Villa PLC.Interpretation of cash flow statementCash flow statement: While an organisation needs to analyse sources and application offunds than cash flow statement is an helpful tool to get the exact information. The organisation isnot preparing any cash flow statements that leads the organisation toward problems because theeare no proper records of cash inflows and outflows. Aston Villa PLC is exempted fromformulating cash flow statements according to revised financial reporting standard 1 (Epstein,Buhovac and Yuthas, 2015). Consolidated cash flow statements are generated by its parentcompany Reform Acquisition Limited.Analysis of performance of company with the help of ratiosFinancial ratios: ratios are calculated to analyse that organisational is performing well ornot and invested money is utilised effectively or not. To measure financial strength of AstonVilla PLC few financial ratios are calculated that are as follows:Current ratio: It is used to analyse ability of an organisation to pay back all the longterm and short term debts. For Aston Villa PLC the ratio is calculated to examine thatwhat amount of current assets organisation is having to deal with current liabilities.Formula: Current assets/ current liabilitiesParticulars2015201620172
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