Analyzing GODWIN Plc's Financial Statements: A Comprehensive Report

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Financial Reporting
1

Table of Contents
Introduction......................................................................................................................................3
1.......................................................................................................................................................4
2.......................................................................................................................................................4
3.......................................................................................................................................................5
4.......................................................................................................................................................5
5.......................................................................................................................................................6
A).....................................................................................................................................................6
B).....................................................................................................................................................7
C).....................................................................................................................................................7
D).....................................................................................................................................................9
6.......................................................................................................................................................9
7.....................................................................................................................................................10
8.....................................................................................................................................................10
9.....................................................................................................................................................11
Conclusion.....................................................................................................................................12
References:....................................................................................................................................13
2

Introduction
In this report will discuss the report tom make an international business investment in the
organisation. The organisation is expanding the business from the international investors with the
great market. The investors having the proliferation of accounting relating with the big
organisation. Understand all the background and framework of international financial reporting,
and methods and benefit of the accountability. Organisation has to maintain all the record of
stakeholders, record of all the objective. It discusses on the profit and loss account of the
GODWIN plc, changes in equity and balance sheet of the organisation. It will also discuss on the
international accounting standard (IAS) and international financial reporting standards.
3

1
Financial reports include the financial statements of the company which is required as it gives
the detailed information about the financial aspects of the company. The financial statements are
prepared so that the effective information can be attained from the financial statements. The
financial statements are helpful in taking the appropriate decisions regarding the investment of
the company. The purpose of these statements is that the information related to the profit, loss,
income, expense, cash flows, assets, equities, liabilities, etc are evaluated. It also helps in doing
the calculations of profitability, solvency and the efficiency ratio through which the financial
stability of the company can be evaluated. The main purpose is that these statements convey the
information about the financial aspects of the company (Crowther, 2018).
The purpose of preparing financial statements is that the financial health of the company is
accessed by the different users so with the help of this reporting they can ascertain the financial
performance of the company. The shareholders review the financial reports so that the business
activities can be conveyed. It helps in delivering the financial information of the company to the
lenders and the other users.
2
The conceptual and the regulatory framework are the theory part which deals with the financial
and the fundamental issues. The purpose of preparing the conceptual and the regulatory
framework so that the financial statements of the company can give the accurate and the correct
information and no accounting issues will be finding in the company. The key principle which is
used in the financial accounting is GAAP which states the rules and the regulations so that the
relevancy and the reliability in the company can be maintained.
In financial information qualitative information is required as they are more reliable in the
financial statements of the company there is the need of some key qualities such as the financial
statements of the company should be relevant, materiality, faithful, understandable and
comparable (Crowther, 2018). The financial statements prepared by the company should be free
from the material misstatements and present the true and fair financial information of the
company.
3
There are many stakeholders in the organisation such as creditors, investors, government,
employees, management, competitors, customers, etc. All the stakeholders require the
information of the financial statements so that appropriate decisions can be taken (Gigler, et. al.,
2014).
Owners: Owners requires the financial statement information so that they can know how much
dividend they will get for the money they have invested in the company. They want to know the
financial position of the company so that they rely that they have invested in the right company.
4

Government: Government also took interest in the financial statements of the company as they
want to evaluate how much tax the company will pay. They also ensure that whether the
company is complying with all the statutory obligations or not.
Creditors: Creditors of the company wants to evaluate the performance of the company than only
they can give the funds to the company. They analyse the financial position of the company that
they are reliable to pay the debts on time or not.
4
With the help of the financial reporting the financial metrics of the company is evaluated. It
helps in determining the financial performance of the company. Financial reporting has the great
value in the company as they provide the structured performance which helps in evaluating the
financial performance of the company (Givoly and Hayn, 2016). The financial statements have
the great value as all the shareholders in the company rely on that statements as they are
accurate, proper and presents the true and fair results. They are also valued as it helps in taking
the valuable decisions and also provide the reliable information to the stakeholders of the
company. Financial statements include the historical information of the company so they are
valued to predict the future transactions.
5
A)
Statement of profit and Loss Account of GODWIN Plc for Year Ended 31st December 2017
Profit loss account is the part of financial performance of an organisation. The profit and loss is
determined the income and gains is in credit and expenses and losses is in debited (Accounting
explanation. 2019).
Statement of profit and Loss Account of GODWIN Plc for Year Ended 31st December
2017
Particulars Amount (£'000) Amount (£'000)
Revenue from Operations 3,85,100
Other Revenue for company - Rental
Income 5,600
Total Revenue from Operation 3,90,700
5

Cost of Sales 2,91,700
Less: - Additional Cost in Closing stock 900.00 2,90,800
Operating Expenses 78,500
Profit from Operations 21,400
Financial cost 830
Depreciation for the year 55,250
Net Profit from Operations (34,680)
Less - Tax for the Year 1,500
Net Profit after tax (36,180)
Less- Preference dividend 2,330
Less - Interim Dividend 4,340
Net Profit Transferred to Balance sheet (42,850)
Calculation
Calculations of Depreciaiton for current year
Assets Amount / Cost Rate of
Depreciaiton
Depreciatio
n
6

Non-current assets 78,500 50
39,
250
Plant & Equipment (WDV
Method) 88,000 12.5
11,
000
Property 80,000
SLM For 16 Year
nil salvage value
5,
000
Depreciation for Current Year
55,
250
B)
Statement of changes in equity
The statement of changes in equity is the statement of retained earnings, there is change in the
owner equity with all the accounting. The changes in equity present the reserves and surplus of
the shareholders equity, increase and decrease in capital (Skyler, 2019).
All values in £
Statement of changes in Equity
Shar
e
capit
al
Share
premiu
m
accoun
t
Capital
and
Capital
redempti
on
reserve1
Merg
er
reserv
e
Retain
ed
earnin
gs
Tota
l
At 1 January 2016 705 4,713 18 3,149 661 9,246
Profit for the year 0 0 0 0 2,282 2,282
Shares issued, net of expenses 237 36 0 2,468 0 2,741
7

Rights issue option (net of
taxation) 0 0 0 (167) 0 (167)
Net own shares adjustment 0 0 0 0 (67) (67)
Share option expense 0 0 0 0 158 158
Capitalised on scrip dividend 6 (6) 0 0 0 0
Dividends, net of scrip 0 0 0 0 (925) (925)
At 31 December 2016 as
previously stated 948 4,743 18 5,450 2,109
13,26
8
Restatement2 0 0 0 167 (167) 0
At 31 December 2016 as restated 948 4,743 18 5,617 1,942
13,26
8
Total comprehensive income 0 0 0 0 333 333
Shares issued, net of expenses 44 106 0 1,667 0 1,817
Net own shares adjustment 0 0 0 0 (81) (81)
Share option expense 0 0 0 0 276 276
Capitalised on scrip dividend 21 (21) 0 0 0 0
Dividends, net of scrip 0 0 0 0 (739) (739)
At 31 December 2017 1,013 4,828 18 7,284 1,731 14,87
8

4
C)
Statement of Financial Position of GODWIN Plc (Balance sheet)
For the year ended on 31st December 2017
Balance sheet is the final result of the organisation, the statement consist current assets,
liabilities and capital of a business at the specific time period. It is performing in one year for
the individual organisation (Corporate Finance Institute. 2019).
Particular
Amount (in
£'000)
Amount (in
£'000)
Amount (in
£'000)
(A) Non-Current Assets
Plant & Equipment
88,0
00
Less : Accumulated
Depreciation
45,4
00
Less : Current Year
Depreciation
11,0
00
31,60
0
Land & Property
1,20,000.
00
Less : Accumulated
Depreciation 5000 1,15,00
0
Investment property
23,3
00
9

Less : Revaluation Loss
2,3
00
21,00
0
(B) Current Assets
Inventory
18,90
0
Trade receivables
68,00
0
Total Non-current assets
86,90
0
Less :- Depreciation
39,25
0
47,6
50
Current Liabilities
Trade Payables
65,70
0
Differed Tax Liabilities
8,90
0
Provision for Tax Payable
1,50
0
Bank Overdraft
1,50
0
77,6
00
(29,95
0)
Net Assets
1,37,65
0
10

Share Capital @ 25p per share
86,70
0
10% Redeemable preference
shares
23,30
0
Add- Reserves & Surplus
Revaluation reserve
38,40
0
Retained Earnings
32,10
0
Net Profit
(42,85
0)
Net Liability
1,37,65
0
Dr. Cr.
Revaluation Reserve
Particular Amount Particular Amount
By Revaluation Loss on
Investment
2,30
0 Opening Balance 40700
By Closing Balance
38,40
0
40700 40700
11

D)
As per the profit and loss account and cash is similar to both of us. This two are the part of
income statement as and there is only difference in both that is cash flow is having the position in
the income statement and there is only one difference that profit and loss is maintaining the
account of depreciation mon the current assets of the organisation.
In the cash flow and changes in equity there is the part of the income statement. The changes in
the equity there is only one difference that the equity is taking all the shares determining. The
final amount of the equity is taken on the cash flow (Patrick, 2019).
6
The financial statements reveal the financial performance of the company. With the help of the
financial statements the calculations are done to evaluate the gross profit, net profit, liquidity and
the other solvency ratio of the company. The financial statements communicate the financial
stability by interrupting income statements, balance sheet and the cash flow statements of the
company. Financial statements include the historical information of the company so they are
valued to predict the future transactions. The historical data of the financial statements helps in
making the plans and the budgets through which the company can achieve the good results in the
future (Gigler, et. al., 2014). By interrupting the financial statements, the company can know
how much interest they have to pay on the loans and how much dividend is required to pay to the
dividends. The overall financial strength of the company is evaluated by communicating whole
financial statements of the company.
7
International Accounting Standards (IAS): These are the oldest accounting standards which
were issued by the international accounting standards board based in the London. It was formed
in the 1973 which has the main goal to spend the business around the world. IAS accounting
standards helps in increasing the transparency and trust in the financial statements of the
company so that the trade and investments can be increased globally (Chen, et. al., 2013).
International Financial Reporting Standards (IFRS): These are the standards which are
issued by the foundations of the IFRS and the IASB so that the global language can be provided
for the business affairs of the company. It reflects the national accounting standards which are
followed by the accountants so that reliable and comparable financial statements are prepared.
8
There are many benefits of IFRS in the organisation such as it helps in increasing the rate of the
economy (Givoly and Hayn, 2016). The standards of these are complied with the proper rules
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