Grenco plc: Financial Statements, Profit Analysis & Suggestions

This report provides a comprehensive financial analysis of Grenco plc, a British-based retail and general merchandising company. It includes an explanation of different types of financial statements, such as the balance sheet, income statement, and cash flow statement, detailing the information they provide and their interrelation. The report calculates Grenco plc's profit and loss, presenting an income statement for the year ending 20XX, and interprets the results, highlighting the company's profitability despite expenses. Based on the financial data, the report offers suggestions for improving the organization's financial aspects, such as managing fixed and current assets, addressing potential issues with debtors and creditors, and controlling drawings to enhance profitability. The analysis concludes that financial statements are crucial for both the company and its competitors, providing insights for future strategies and recommendations for financial planning. Desklib is a platform where students can find such solved assignments.

BUSINESS

Table of Contents
Explain different types of financial statements. What sort of information they provide and define
their association with each other.......................................................................................................4
Calculate profit and loss for the company. Also prepare a income statement....................................5
Based on the above collected data provide useful suggestions in financial aspects of the
organisation.......................................................................................................................................7
REFERENCES............................................................................................................................9

INTRODUCTION
From the report prepared below for company Grenco plc that is British based and deals in
areas such as retail and general merchandising retailer having headquarters in Manchester
(Broekhuizen, Bakker and Postma, 2018) .
It further includes calculation of net profit from the income and expenses incurred in a business.
It also provides prepared balance sheet for two years that would help to have a better
understanding of working of a organisation in the market and its financial health as well as its
stability, sustainability and positioning in competitive environment. It helps other companies to
have an idea as if it would prove to be fruitful for them to invest in a company or not and what
can be predicted and interpreted by the data provided to them. The report further helps to have a
better understanding of reports prepared under that helps to provide suggestions and
recommendations helpful in the decision making of a firm in long run.

Explain different types of financial statements. What sort
of information they provide and define their
association with each other.
 Balance sheet: It can be explained as a statement consisting of finance related figures that
explains the assets available with a organisation, the liabilities and debts it has to pay &
cover in a given time frame. Along with other statements it also helps Grenco plc to have
a idea about their financial position in market. It also helps investors such as Durwent &
Co. financial services ltd. To have a better idea whether it would be beneficial for them to
invest in the related company and buy its shares. It can also be defined as a record that
takes in account firm’s liabilities, assets and net worth (Jongen, 2018). They are carried
out at end of a financial period such as any month end, quarter end or year end. It is
helpful at the time of winding up of company, it serves as a guide at the time of merger
and acquisition of a organisation. Another name for balance sheet is statement of
financial position that is considered as a summary of balance related to financial areas
such as in case of individual or business whether it be a partnership, corporation, sole
proprietorship or any private limited enterprises. The simplest manner to have a deep
assessment of balance sheet is with the help of ratio calculation. It is considered as more
detailed version of accounting equation that prepares asset, liabilities and equity
possessed by owner during a period. Thus, it would be helpful for Durwent and co to
have a better understanding of balance sheet for decision making regarding purchase of
share and further investment that is being planned by them. It can be said that the three
financial statements that are income and cash flow statement including balance sheet are
useful and linked because they carry a common goal that is to reflect the true position of
a business in competitive environment. It helps the competitor to understand which plan
is being implemented, what is the profitability status, acquiring of funds, assets available
and what are the riskier parts that would serve as an advantage for them in future. It also
helps to attract more consumers from market who would have an urge to invest in market
for better returns after analysing previous year’s results and making best use of it as well.
 Income statement: It can be defined as a record related to finance-based areas that reflect
income and expenses incurred & earned over a period of time by Grenco Plc company. It
would help Durwent and company to have a look at accounts and records for predicting
whether the business would sustain in the coming time or not. It thus helps other users
who are linked and who are planning to invest their money in the firm in near future for
having a better understanding of the funds collected and cash used by the organisation.
The components included in income statement is cost of sales, administrative expenses,
revenue, gains and losses that would help to calculate net income/ profit. It would also
help to save funds for future and keep retained earnings that could be used in the hour of
need in coming future. Income statement helps to have an thorough overview of the profit
earned and revenue generated by the company after deduction of related expenses and
cost involved at the time of sale and purchase of goods. Income statement further helps

competitor to compare its performance with that of other firm that would help them to
search for innovative ideas that would contribute in development of market as well as
companies too. It is linked with cash flow as well as balance sheet because they consist of
finance-based records that include whatever is to be recorded on grounds of finance thus
they reflect one. Common thing that is financial stability of a firm in market and its
financial performance as well in relation to carrying out necessary events (mLarsen and
Thorsrud, 2019).
 Cash flow statement: It can be described as a financial record that deliver aggregate
information regarding all cash collected by the Grenco plc company and the fund it
receives from the operational work carried out and if any external investments made by
the firm. It also takes in account the cash that is being used by the enterprise for paying In
relation to its business activities. There are three kind of cash flow that help to analyse
and have a track of performance of the work carried out by them such as relating to
investment, finance and operational activities as well (Miciuła, Kadłubek and Stępień,
2020). It would help Durwent company to have a better idea that whether the company is
in sound position or not and if has adequate money available with itself. It is linked with
balance sheet and income statement as well the reason being it also reflects the working
and performance of the company over a period of time. It can be further explained as the
core of business without which nothing can be operated. Every operation and activity
demand cash and availability of funds present with the organisation well in time so that it
could be used at the time it is needed.
Calculate profit and loss for the company. Also prepare a income statement.
Below the calculation of income statement of Grenco plc company is presented in form of
table as under:
Grenco plc company
Income statement (for year ending
20XX)
Revenues $ $
Sales 395000
Total revenue 395000

Expenses
Cost of goods sold 325000
Wage 35000
Rent 5500
Telephone
expenses
1220
Van run cost 200
Motor expenses 180
Lightening and
heating expense
4000
General expense 6000
Total expense (375900)
Income 19100
Interpretation: From the above calculations made it can be interpreted that even after
having so many expenses and costs lined up in relation to running a business. Grenco plc is
trying to generate profit and hold a profitable position in the market. It can be observed that it is
reflecting a positive figure thus it would attract more investors from market the reason behind is
that it is trying to carry out operational activities and cover expenses as well. Sales made by the
Grenco company is higher than the cost incurred for facilitating such sale related functions.
Income/ profit calculated so far is 19100 thus it can be predicted that the business can carry out
its future based operations efficiently and effectively (Müller, Buliga and Voigt, 2018). It can
also plan to expand its business that would give more reasons for companies such as Durwent for
purchase of share and investment in enterprise as well. It can be suggested from above
calculation that the cost of goods can be minimized because it affects the running and working of
business in adverse ways that would not help the business to attract additional people towards it.
Profit and loss or income statement provides a fair and transparent picture that indicates how far
the company has come and what are the measures and actions it can plan for the business to

stand in a market. It thus helps users to have an idea about achievements a company has come
across and the methods applied by them during the journey.
Based on the above collected data provide useful suggestions in financial aspects of the
organisation.
From the above analysed balance sheet prepared by Grenco plc company it can be
recommended that the company has increased the value of fixed assets over a period of time.
Current assets are also recorded at a increasing rate whereas debtors declined in the next year and
trade creditors increased that indicates that there might be rise of a problematic situation in near
future. Capital balance of the company seems to rise and even the net profit of the organisation
has also increased by a certain amount (Pizzi, Rosati and Venturelli, 2021). Drawings made are
more as compared to last year that might serve as a drawback for the company thus it is
recommended that the company must find out the reasons that result in more drawings and how
it can be improved over time. Net profit has taken a rise from past year that indicates that the
business is earning well and focusing on growth, expansion and to earn more receive than before.
For improving the work company must look into the matters that increases liability and decreases
profit. This would further help business to work without any obstacles. As it is well known that
balance sheet helps to evaluate the financial position of any business of any type to give a better
understanding of the soundness and solvency it maintains in the environment. It is useful in
every case whether large or small firms because it helps to find actions that would contribute in
relative expansion of activities. Balance sheet is prepared at the end of any financial or
accounting year to have an idea what assets a business has and what amount of liabilities and
debts are to be covered by the organisation in lesser time possible (Samuels, 2019).

CONCLUSION
From the above asserted report, it can be concluded that financial statements such as
Balance sheet, cash flow statement and income statement are helpful for the company as well as
for competitors too. The above report also reflects the calculation of profit through income
statement prepared so far by the company. It thus forms a base for other companies present in
market to understand the innovative approaches adapted and the running of related companies in
a better manner. It further also helps to have a better idea of what can be future situations for
which organisation must prepare itself and prepare strategies accordingly. It also helps to provide
useful recommendation and suggestion to company that wants to have an idea as what can be
done in coming days and amount that would be needed for planning such operations.

REFERENCES
Books and Journals
Broekhuizen, T.L., Bakker, T. and Postma, T.J., 2018. Implementing new business models:
What challenges lie ahead?. Business Horizons, 61(4). pp.555-566.
Freudenreich, B., Lüdeke-Freund, F. and Schaltegger, S., 2020. A stakeholder theory perspective
on business models: Value creation for sustainability. Journal of Business
Ethics, 166(1). pp.3-18.
Fuller, J., Jacobides, M.G. and Reeves, M., 2019. The myths and realities of business
ecosystems. MIT Sloan Management Review, 60(3). pp.1-9.
Jongen, W., 2018. New business models. World Scientific Book Chapters, pp.216-235.
Larsen, V. and Thorsrud, L.A., 2019. Business cycle narratives.
Lombardi, R., 2019. Knowledge transfer and organizational performance and business process:
past, present and future researches. Business Process Management Journal.
Miciuła, I., Kadłubek, M. and Stępień, P., 2020. Modern methods of Business Valuation—case
study and new concepts. Sustainability, 12(7). p.2699.
Müller, J.M., Buliga, O. and Voigt, K.I., 2018. Fortune favors the prepared: How SMEs
approach business model innovations in Industry 4.0. Technological Forecasting and
Social Change, 132. pp.2-17.
Pizzi, S., Rosati, F. and Venturelli, A., 2021. The determinants of business contribution to the
2030 Agenda: Introducing the SDG Reporting Score. Business Strategy and the
Environment, 30(1). pp.404-421.
Samuels, R.J., 2019. The business of the Japanese state. Cornell University Press.