HND商务会计高级outcome345报告答案docx.docx

1、HND商务会计高级outcome345报告答案docx.word 可编辑 .Index pageIndex page .Introduction .Background .FindingsSection 1 Section 2 Section 3 Conclusion Reference . 专业 .专注 .word 可编辑 .IntroductionBackgroundSSP plc is a company operating in the food manufacturing industry. It is engaged in foodprocessing, supplying all

2、 the main supermarket chains with first class process meatproducts. During the last few years the company has been difficult because of the BSE andFoot and Mouth disease made a declining demand for meat product. The bad outstandingachievement stopped in 2004 and a partial rebound in the market produ

3、ced an increase inturnover by nearly 15%. It is expected that this rebound in the market will gathermomentum over the coming year and the SSP plc is planning to take even greater stridesforward by opening a new processing plant in Glasgow.As requested in the chief executive s memo of 30 December, he

4、re is my reportsummarising and analysising the financial position of the SSP plc for the year 2003 and2004.OutlineThe main body of the report will evaluate five parts:Part 1- Analyze the users of financial information and the purpose of using.Part 2- State of financial source and categorize with the

5、ir characteristics.Part 3-Explain the cash flow statement of SSP plc.Analyze the recent financial performance and position of the SSP plc.(Including my recommendations about how to improvement of businessperformance). 专业 .专注 .word 可编辑 .FindingsSection 1. Users of financial accounts.Users of financia

6、l statements are a group of people or organizations who use theinformation to make evaluations and decisions. Users of financial information can bedivided into two categories: internal and external users.Now, I will use a table to show you the users purpose and sources of informationto get the state

7、ments.Section 2. Source of financesTo run a business, organizations require finance for different proposes and for varyinglengths of time. In the finance, we divide sources of capital into two categories: equitycapital and loan capital. Equity capital is the finance provided by the owner and there i

8、s nointerest to pay. Loan capital refers to money that is borrowed from a source outside thebusiness. The interest of loan capital must be paid. Sources of finances could be clarifiedinto short, medium and long term. The short-term refers to finance that are borrowed fora period of no more than one

9、year. The medium-term refers to funds that are borrowed fora period of between two and ten years. Long-term refers to funds that are borrowed for aperiod of more than ten years.In the case study, the source of finances of SSP plc is: trade creditors, tax, bank overdraft,debentures, ordinary share ca

10、pital and the retained profits from last account period. 专业 .专注 .word 可编辑 .Short-term sources:1.Trade creditors:Trade creditors are produced when the purchase of raw materials or stock is delaying topay, thus, there is more cash which would be used for other uses. There is also aninterest free way o

11、f raising finance. However, the credit could lead to poor relationswith suppliers and the customers may forfeit discounts.The credit is 544,000 in 2003 and it decreased to he percentage405,000ofin 2004. Tdecrease is 25.56%. The decrease of credit infers that SSP plc has a good financialsituation tha

12、t it has a strong ability to pay credits back to suppliers. This could improvethe relationship with suppliers.2.Bank overdraft:Bank account holders can prearrange with the bank to draw cheques to a greater valuethan the actual balance in the account. Interest should be paid by customers and bankchar

13、ges will apply where an overdraft limit has been exceeded. Bank overdraft is flexibleand cheap. It has a low cost. Some small bank overdraft even has a free of charge.SSP plc had no overdraft but the number increased to 86,000 in 2004. Theshows that the company borrowed money from bank for its expan

14、sion in Glasgow.Long-term sources:1.Debentures:Debentures are loans make to companies that carry a fixed rate of interest. The. 专业 .专注 .word 可编辑 .company fixeds assets normally secure debentures. Debentures have a fixed timeperiod or an open time period. The shareholders are not debenture holders. A

15、debenture interest is paid as an expense not an appropriation of profit.SSP plc has a fixed debenture ( 1,560,000) in the year of 2003 and 2004. It tells us thecompany s fixed assets are steady.2.Ordinary shares:Ordinary shareholders receiving pay-outs from company after preference shareholdersare p

16、aid. Ordinary share dividends are not fixed and subject to companyperformances and decisions of management in paying dividend.In SSP Company, the ordinary share capital is 1,950,000and in2004both.It2003infers that the company has a steady operation situation.3. Retained ProfitsThe retained profit is

17、 the finance brought from the last financial period. It is not fixedand may be a negative number. It presents operational situation of last period.The retained profits decreased from 505,000 to 420,000. The percentage change ofdecrease is 16.83%. The lower ratio shows us the company had made fewer p

18、rofits in2003 then it was in 2002.Section 3. Ratio Analysis1.Major inflows is Net cash flow operating activates of 1,345,000.Major outflow is Payments to acquire fixed assets, which takes 984,2.Ratio Analysis. 专业 .专注 .word 可编辑 .Profitability Ratios:Gross Profit Percentage=Gross profit/Turnover x 100

19、%2003: GPP= 7,000,000/ 11,674,000 x59100.96%=2004: GPP= 8,037,000/ 13,382,000 x60100.06%=Trend: IncreaseAnalysis: The increase of ratio is a good sign. The positive trend can be an indicationthat stock control of meat product has improved, demand for the meat product hasincreased after the diseases,

20、 or purchasing policies have improved. The managersshould keep the good trend and go on develop it, such as improving marketingstrategy, setting better pricing policy, or improving stock control.Net Profit Percentage=Net Profit before Taxation/ Turnover x 100%2003: NPP= 1,182,000/ 11,674,000 x10100.

21、13%=2004: NPP= 901,000/ 13,382,000 x 6100.73%=Trend: DecreaseAnalysis: The decrease of the ratio is a bad sign that it indicates a low profit of thecompany. From the P&L Account of the SSP plc, we know that although the grossprofit increased, the operation cost is much higher in 2004; it leads to a

22、decrease innet profit. So the managers should think about how to decrease our operation cost tohelp our company earn more profit.Liquidity Ratios:Current Ratio=Total Current Assets/Total Current Liabilities. 专业 .专注 .word 可编辑 .2003: CR= 1,195,000/ 767,000=1.562004: CR= 1,248,000/ 701,000=.78Trend: In

23、creaseAnalysis: the increase of ratio is a good sign. Generally speaking a healthy current ratiois at least 2:1. The 1.56 and 1.78 indicate the company is a little bit over trading andhave difficulty in meeting its short-term debts. The main reason for the increase is theincrease in the total curren

24、t assets and decrease in the total current liabilities. Isuggest that the company may keepmore profit for the short-term debts.The Acid Test Ratio=Liquid Assets/Current Liabilities2003: ( 1,195,000-608,000)/ 767,000=.772004: ( 1,248,000-796,000)/ 701,000=.64Trend: DecreaseAnalysis: The decrease is a

25、 bad sign. The ratio should be 1:1. But the ratio in both of2003 and 2004 is less that 1. And unfortunately, the ratio is still decreasing. SSP plcmeets a liquidity problem that the liquid assets decrease. The company managersshould pay attention to this ratio and organizatio n s development.Efficie

26、ncy Ratios:Fixed Asset Turnover=Turnover/Fixed Assets2003: 11,674,000/ 4,017,000=2.91 times2004: 13,382,000/ 4,318,000=.10times. 专业 .专注 .word 可编辑 .Trend: IncreaseAnalysis: Where this ratio gas increase, this is a good sign. It indicates that the existingfixed assets are generating more sales and may

27、be investment in new fixed assets gascould be been paid off. Managers of SSP plc should develop and focus on it.Debtors Collection Period=Debtors/Turnover x 3652003: 306,000/ 11,674,000 9x.57365=days2004: 452,000/ 13,382,000 12x365=.33daysTrend: IncreaseAnalysis: It is a bad sign that there is an in

28、crease in DCP . It indicates that SSP s mhave a poor credit control of poor invoicing system. The bad debts may also increase.The leaders of SSP should check their invoicing and reminder system to keep the ratioa proper range.Investment Ratios:Interest Cover=Profit Before Interest & Tax/Interest Cha

29、rges2003: 1,416,000/ 234,000=6.052004: 1,135,000/ 234,000=.85Trend: DecreaseAnalysis: This ratio shows how capable the company is of covering its interest charges.The decrease is not good because the company is less able to meet its interestpayments. But the ratio is still in a reasonable range. Leaders should try to increasecompany s profit to keep this ratio a high level. 专业 .专注 .word 可编辑 .Debt Ratio=Total Debts/Total Assets x 100%2003: ( 767,000+ 1,