Proper Understanding of the Financial Health | Assignment

Added on - 01 Apr 2020

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Financial Reporting
Executive Summary:This assignment has been developed to describe that a how a financial report should bestructured for proper understanding of the financial health of the company and also to identifythe financial position of the company within the industry. The assignment describes how thedifferent financial statements are connected and how the accounting data can be derived in ameaningful manner from the books of account of a company. After preparing the financialstatements the tools of ratio analysis are to be applied to understand the financial health of thecompany and also to identify the possible heads of accounts where measure should be applied forbetter performance of the company in comparison to the industry benchmark.
Table of ContentsExecutive Summary:........................................................................................................................1Introduction:....................................................................................................................................1Results & Findings:.........................................................................................................................1Discussion:.......................................................................................................................................4Conclusion & Recommendation......................................................................................................4Reference:........................................................................................................................................5Appendix:........................................................................................................................................5
Introduction:This assignment has been prepared to discuss that how an analyst should proceed step by stepstarting from the books of accounts of the company for understanding the financial health of thecompany(Biddleet al.,2009). Here the analyst first check the raw books of accounts of thecompany and prepare the journal entries for each financial transactions, then the journal entriesare posted to the general leader under the appropriate heads of accounts. After that, the trialbalance has been prepared and then profit & loss accounts and balance sheets have been createdto develop the ratio analysis as the calculated ratios are good indicators of the financial health ofthe company. The ratios are then analysed to understand the financial health of the company andwhat are the underlying factors that are contributing to the good or bad financial performance ofthe company.Results & Findings:The profit & loss statement of the company defines that the annual turnover of the company isaround $158333.55 ; therefore the company is falling in the benchmark turnover group of$150,001 – $600,000.Items of calculationNet profittransferred tobalancesheet57980.35TotalRevenuereceipt158333.6Total Asset435866CapitalEmployed151156operatingincome/EBIT115627.8Current2025.67
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