Stortford Yachts Ltd. Financial Analysis Report

The report analyzes the financial performance of Stortford Yachts Ltd. using various ratios and operational data for the years 2015 and 2016. The findings indicate that while the company was in a favorable position in 2015, its performance declined in 2016. Recommendations are made to improve cost-effectiveness and manage debtors collection periods.

MANAGIN FINANCIAL
RESOURCES

TABLE OF CONTENTS
INTRODUCTION.......................................................................................................................................3
TASK 1.......................................................................................................................................................3
1.1 Ascertaining the difference between management and financial accounting...............................3
1.2 purpose of various financial statement in profit and non-profit organization.....................................4
1.3 ascertaining the group of stakeholders and their specific requirements.............................................5
TASK 2.......................................................................................................................................................7
2.1 Analyzing the financial health of Stratford Yachts Ltd......................................................................7
2.2 presenting the report which ascertains the financial performance of business...................................8
CONCLUSION...........................................................................................................................................9
REFERENCES..........................................................................................................................................10

INTRODUCTION
To perform the business operations the requirements of finance and funds is the most
essential thing. There are various sources from which the firm can become able to gather the
adequate amount of funds. The present report will elaborate the financial aspects and the sources
through which the firm can gather capital funds for the business activities. There will be
discussion over Stratford Yachts Ltd. Financial health and the managers will be suggested the
fruitful techniques will be implicate as to have improvements in the financial health of the
business.
TASK 1
1.1 Ascertaining the difference between management and financial accounting
In accordance with the perspective and importance of this terms which in turn helpful
controlling of internal and external accounts of organization. The motive of such accounting
techniques to improve the financial stability as well as bring the capital strength on which firm
will have adequate growth. The managements accounting is useful for executing and managing
the internal operations of the entity such as executing the operations in each units. It also
determines the preparation of budgets for each activity which in turn used for enhancing the
growth (DePasquale and et.al., 2017). Thus, the implication of such technique benefits the
professionals in analyzing the outcomes as well as in accurate decision making. On the other
side, in accordance with the financial accounts, these are the accounts which were made out of
the summary of various accounts which will be presented among the external users of such
accounts such as investors, shareholders, and government and banking authorities. These are the
users which seek for the financial conditions of the organization. Therefore, there has been
various differences among such accounting terms such as:
Basis Management accounting Financial accounting
Purpose These are the accounts which
are being prepared with the
motive of making accurate and
These are the accounts which
were being prepared for
disclosing the financial health

efficient decision which will
improve the internal
performance of entity.
among the external users. The
main motive is to attract the
investors for capital funding.
Usefulness It is quite essential or
mandatory to be prepared.
It is optional (Yawar and
Seuring, 2018).
Users All the external users such as
shareholders, government
authorities and banking
agencies.
Used by internal stakeholders
to improve the cost efficiency
and up bringing the
performance level of entity.
Frequency These are being prepared on
quarterly, half yearly and
annual basis.
These are on the daily basis or
as needed and required.
Scope The preparation of such
accounts is on the basis of past
transactions which will be
used for the motive of
improving the company
strength (Hoekstra and et.al.,
2017).
There will be discussion is
over the production and
internal process of the
business which will be
modified and changed as per
requirements.
1.2 purpose of various financial statement in profit and non-profit organization
In relation with the financial statements these are the data sheet which contains all the
financial history of the business. Therefore, this statement represents the efficiency of the
business in meeting the short term as well as long term debts of entity which will be fruitful for
the shareholders to make investments. They seek the information about the annual turnover and
profits earned by the business over a period which will be profitable to them in having the
fruitful returns over their investments (Knowing the Differences Between Nonprofit and For-
Profit Accounting, 2015). Thus, many profit and non-profit organizations use such accounting
techniques which will be helpful to them in revenue gathering as well as to have effective control
over cost utilization. There has been preparation of various statements such as:

Statements used by the profit organization:
The profit organizations seeks for the shareholder’s attention towards the firm’s financial
health on which they determining the fruitfulness of the firm in making them favorable returns
over their invested capital. However, there has been preparation of various accounts and
statements such as:
 Balance sheet
 Profit and loss statement
 Cash flow statement
 Owner’s equity
Statements used for non- profit organization:
The use or need of preparing the financial statements by the non-profit organization is to
make the adequate analysis over the costs and budgets used in the operational activities. They
have the funds from the operation or from the grants of various external parties such as
government, individual donations etc. therefore, the main purpose of them using the financial
statements is bring the information about the financial condition of the organization as well as
the availability of funds for initiating operations (Basco-Carrera and et.al., 2017). Therefore,
there are various statements which are being used by such industries such as:
 Statement of financial position
 Activities statement
 Cash flow statement
 Change in net assets
1.3 ascertaining the group of stakeholders and their specific requirements
By considering the requirements of stakeholders in the premises which is differentiate as
per their choices and purpose of such statements. However, there in an organization there are
several stakeholder and all of them have willingness to acquire the information regarding the
financial health of the organization for their own purpose. Thus, there are some stakeholders and
their requirements from the financial statements of the organization:

Shareholders: these are main users of the firm’s financial data set. They determine the
profit earned by the firm over the period as well as compare the past period’s statement to
ascertain the growth of the business. Thus, due to such information they estimate and analyses
the profitability of the firm as well as also predict the growth of the business in the upcoming
period (Cole, Giné and Vickery, 2017). Additionally they make the adequate analysis over the
dividend return paid by the firm over the profits earned by them in the last period. Moreover, on
the basis of such details they make their investment decisions and which will be fruitful for the
growth of the entity.
Governmental authorities: the main use of financial statements by the government is to
analyze and determine the profits retained by the firm over the period as well as the tax payable
by them. They ascertains that how much corporate tax is being payable by the firm in the time on
the revenue earned by them. Here the firm will disclose all the expenses incurred in the period as
well as the assets and liabilities of the firm in the right state. These all information is being used
by the government as allowable deduction or charges will be implied to the firm.
Banking agencies: These are the stakeholders which analyzed the borrowings, loans,
interest payable by the firm over the period. However, it will be helpful for them in determining
that the firm is being capable for making them the payment of their granted loan in the required
time (De Massis and et.al., 2018). Thus, due to such examination they ascertain and determine
the profitability of the business over the time and on which they have the favorable amount of
interest payable to them.
Directors and top level managers: The use of financial statements by the top level
managers and directors in context with deciding the fruitful strategies for redesigning the
business operations. They analyze the revenue earned by each unit as well as the costs incurred
in their operational activities. However, the preparation of the financial statements will be
helpful for them in cost decisions. There make increment as well as decrement in the funds for
such operations as well as make the effective utilization of all the available resources they plan
alternative options to overcome with the higher costs of the business.
Employees: The workforce of an organization seeks for the information relevant with the
profit made the firm over the period. Thus, it will have positive or negative impacts over their

remuneration payable to them (Vanacker, Collewaert and Zahra, 2017). They have their personal
means to the organization for having the adequate remuneration, bonus, incentives etc. therefore,
it will also motivate them to make effective efforts for the growth of the industrial practices.
TASK 2
2.1 Analyzing the financial health of Stratford Yachts Ltd.
particulars formula 2015
rati
o 2016 ratio
industry
average
return on capital
employed
net operating
profit 0.87
0.9
560
4 0.78
0.619
05 26%
capital employed 0.91 1.26
asset turnover ratio net sales 5.3
1.1
324
8 6.6
1.229
05
1.79
times
total assets 4.68 5.37
net profit margin net profit *100 0.57
11
% 0.51 8% 14.5%
net sales 5.3 6.6
current ratio current assets 1.91
1.2
243
6 2.49
1.310
53 1.87962
current liabilities 1.56 1.9
acid test ratio
current assets-
inventories 1.79
1.1
474
4 2.34
1.231
58 1.76323
current liabilities 1.56 1.9
debtors collection
period trade debtors *365 1.32
90.
905
7 1.84
101.7
58 183 days
net sales 5.3 6.6
gearing ratio total liabilities 1.56
70.
8% 1.9
63.7
% 32%
total stakeholder's 0.91 1.26

liabilities
labour cost as % of
sales direct labour *100 0.98
18
% 1.25 19% 18.1%
net sales 5.3 6.6
operating costs as % of
sales operating cost *100 4.43
84
% 5.82 88% 85%
net sales 5.3 6.6
distribution costs as %
of sales distribution costs *100 0.49 9% 0.61 9% 9.5%
net sales 5.3 6.6
administrative costs as
% of sales
administrative
costs *100 0.22 4% 0.27 4% 4.5%
net sales 5.3 6.6
2.2 presenting the report which ascertains the financial performance of business
From: Assistant Business Planning Consultant
To: Business Planning Assistant
Subject: Stortford Yachts Ltd- Accounts information
Sir/ Ma’am,
As I have analyzed the performance of business during such period there has been
changes in the various ratios and operations. Therefore, it can be said that the firm will have
effective growth in the coming period as well as there will be increment in the profits of the
organization. to determine the financial position of the business with the help of various ratios as
per analyzing the returns the business will have over the applied capital and collected capital of
the business. Therefore, in accordance with the 2015 it was 27.9 and in 2016 it was 22.5 which in
favorable position. It indicates that the business in making appropriate payments to the
shareholders over their invested capital in the organization. In accordance with the debtors
collection period it was 91 in 2015 and 102 in 2016. It indicates that the firm is not as capable as
it was in the last year as to recover the payments from the debtors.
Therefore, in accordance with the performance of the entity it will be suggested to the
managerial professionals that they must make improvements in adopting the cost effective

techniques which will be helpful in reducing the expenses of the firm. On the other side, there
will be fruitful gains as if they manage the ratio between demands and supply as well as allocate
the appropriate costs to each business operations (DePasquale and et.al., 2017). Similarly, they
should ascertain the costs incurred in each operation which were needed to be reduce. It will
reflect on the profits earned by the firm in the period and on which the Stortford will have
appropriate numbers of investors for the capital structure.
CONCLUSION
The above mentioned report will be helpful in analyzing the profitability and efficiently
of Stortford Yachts Ltd. in meeting the operational targets. There report consists of various uses
and importance of financial statement techniques which will enhance the financial position of the
business. Moreover, the data set of 2015 and 2016 has been analyzed on the basis of various
ratios. Thus, it has been determine that in 2015 the firm was having favorable efficiency and
profitability while in the current year the performance was not up to the mark.

REFERENCES
Books and Journals
Basco-Carrera, L. and et.al., 2017. Collaborative modelling or participatory modelling? A
framework for water resources management. Environmental Modelling & Software. 91.
pp.95-110.
Cole, S., Giné, X. and Vickery, J., 2017. How does risk management influence production
decisions? Evidence from a field experiment. The Review of Financial Studies. 30(6).
pp.1935-1970.
De Massis, A. and et.al., 2018. Innovation with limited resources: Management lessons from the
German Mittelstand. Journal of Product Innovation Management. 35(1). pp.125-146.
DePasquale, N. and et.al., 2017. The psychosocial implications of managing work and family
caregiving roles: Gender differences among information technology professionals. Journal
of family issues. 38(11). pp.1495-1519.
Hoekstra, F. and et.al., 2017. Implementation fidelity trajectories of a health promotion program
in multidisciplinary settings: managing tensions in rehabilitation care. Implementation
Science. 12(1). p.143.
Vanacker, T., Collewaert, V. and Zahra, S. A., 2017. Slack resources, firm performance, and the
institutional context: Evidence from privately held European firms. Strategic Management
Journal. 38(6). pp.1305-1326.
Yawar, S. A. and Seuring, S., 2018. The role of supplier development in managing social and
societal issues in supply chains. Journal of Cleaner Production. 182. pp.227-237.
Online
Knowing the Differences Between Nonprofit and For-Profit Accounting. 2015. [Online].
Available through < https://www.paychex.com/articles/finance/difference-between-
nonprofit-and-profit-accounting>.