HND商务会计高级outcome报告答案

1、Index pageIndex page Introduction Background FindingsSection 1Section 2Section 3ConclusionReferenee IntroductionBackgroundSSP plc is a company operating in the food manufacturing industry. It is engaged in food processing, supplying all the main supermarket chains with first class process meat produ

2、cts. During the last few years the company has been difficult because of the BSE and Foot and Mouth disease made a declining demand for meat product. The bad outstanding achievement stopped in 2004 and a partial rebound in the market produced an increase in turnover by nearly 15%. It is expected tha

3、t this rebound in the market will gather momentum over the coming year and the SSP plc is planning to take even greater strides forward by opening a new processing plant in Glasgow.As requested in the chiefexecutive s memo of 30 December, here is my report summarising and analysising the financial p

4、osition of the SSP plc for the year 2003 and 2004.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 their characteristics.Part 3-Explain the cash flow statement

5、 of SSP plc.Analyze the recent financial performance and position of the SSP plc.(Including my recommendations about how to improvement of business performance)FindingsSection 1. Users of financial accounts.Users of financial statements are a group of people or organizations who use the information

6、to make evaluations and decisions. Users of financial information can be divided into two categories: internal and external users.Now, I will use a table to show you the users purpose and sources of information they use to g statements.Section 2. Source of financesTo run a business,organizations req

7、uire finance for different proposes and for varying lengths of time. In the finance, we divide sources of capital into two categories: equity capital and loan capital. Equity capital is the finance provided by the owner and there is no interest to pay. Loan capital refers to money that is borrowed f

8、rom a source outside the business. The interest of loan capital must be paid. Sources of finances could be clarified into short, medium and long term. The short-term refers to finance that are borrowed for a period of no more than one year. The medium-term refers to funds that are borrowed for a per

9、iod of between two and ten years. Long-term refers to funds that are borrowed for a period 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 capital and the retained profits from last account period.Short-

10、term sources:1.Trade creditors:Trade creditors are produced when the purchase of raw materials or stock is delaying to pay, thus, there is more cash which would be used for other uses. There is also an interest free way of raising finance. However, the credit could lead to poor relations with suppli

11、ers and the customers may forfeit discounts.The credit is 544,000 in 2003 and it decreasedto 405,000 in 2004. The percentageof decrease is %. The decrease of credit infers that SSP plc has a good financial situation that it has a strong ability to pay credits back to suppliers. This could improve th

12、e relationship with suppliers.2.Bank overdraft:Bank account holders can prearrange with the bank to draw cheques to a greater value than the actual balance in the account. Interest should be paid by customers and bank charges will apply where an overdraft limit has been exceeded. Bank overdraft is f

13、lexible and 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. The increase shows that the company borrowed money from bank for its expansion in Glasgow.Lon g-term sources:1.Debe ntures:Debe ntures are lo

14、a ns make to compa nies that carry a fixed rate of in terest. The compa ny assets normally secure debentures. Debentures have a fixed time period or an open time period. The shareholders are not debe nture holders. A debe nture in terestis paid as an expe nse notan appropriation of profit.SSP plc ha

15、s a fixed debenture ( 1,560,000) in the year of 2003 and 2004. It tells us the compa ny s fixed assets are steady.2.Ordinary shares:Ordi nary shareholders recei ving pay-outs from compa ny after prefere nee shareholders are paid. Ordi nary share divide nds are not fixed and subject to compa ny perio

16、dical performa nces and decisi ons of man ageme nt in pay ing divide nd.In SSP Company, the ordinary share capital is 1,950,000 in both 2003 and 2004. It infers that the compa ny has a steady operati on situati on.3.Reta in ed ProfitsThe retained profit is the finance brought from the last financial

17、 period. It is not fixed and 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 of decrease is %. The lower ratio shows us the company had made fewer profits in 2003 then it was in 2002.Secti on 3.

18、Ratio An alysis1.Major in flows is Net cash flow operati ng activates of 1,345,000.Major outflow is Payme nts to acquire fixed assets, which takes 984,000.2.Ratio An alysisProfitability Ratios:Gross Profit Perce ntage=Gross profit/Turnover x 100%2003: GPP= 7,000,000/ 11,674,000 x 100%=%2004: GPP= 8,

19、037,000/ 13,382,000 x 100%=%Trend: In creaseAn alysis: The in crease of ratio is a good sig n. The positive trend can be an in dicati on that stock con trol of meat product has improved, dema nd for the meat product has in creased after the diseases, or purchas ing policies have improved. The man ag

20、ers should keep the good trend and go on develop it, such as improving marketing strategy, setting better pricing policy, or improvi ng stock con trol.Net Profit Perce ntage=Net Profit before Taxatio n/ Turnover x 100%2003: NPP= 1,182,000/ 11,674,000 x 100%=%2004: NPP= 901,000/ 13,382,000 x 100%=%Tr

21、end: DecreaseAnalysis: The decrease of the ratio is a bad sign that it indicates a low profit of the company. From the P&L Acco unt of the SSP plc, we know that although the gross profit in creased, the operati on cost is much higher in 2004; it leads to a decrease in net profit. So the man agers sh

22、ould think about how to decrease our operation cost to help our company earn more profit.Liquidity Ratios:Current Ratio=Total Current Assets/Total Current Liabilities2003: CR= 1,195,000/ 767,000=2004: CR= 1,248,000/ 701,000=Trend: In creaseAn alysis: the in crease of ratio is a good sig n. Gen erall

23、y speak ing a healthy curre nt ratio is at least 2:1. The and indicate the company is a little bit over trading and have difficulty in meeti ng its short-term debts. The main reas on for the in crease is the in crease in the total curre nt assets and decrease in the total current liabilities. I sugg

24、est that the company may keep more profit for the short-term debts.The Acid Test Ratio=Liquid Assets/Current Liabilities2003: ( 1,195,000- 608,000)/ 767,000=2004: ( 1,248,000- 796,000)/ 701,000=Trend: Decreases preAnalysis: The decrease is a bad sign. The ratio should be 1:1. But the ratio in both o

25、f 2003 and 2004 is less that 1. And unfortunately, the ratio is still decreasing. SSP plc meets a liquidity problem that the liquid assetsdecrease.The company managersshould pay attention to this ratio and organization s development.Efficie ncy Ratios:Fixed Asset Turno ver=Tur no ver/Fixed Assets200

26、3: 11,674,000/ 4,017,000= times2004: 13,382,000/ 4,318,000= timesTrend: In creaseAn alysis: Where this ratio gas in crease, this is a good sig n. It in dicates that the exist ing fixed assets are gen erati ng more sales and maybe inv estme nt in new fixed assets gas could be bee n paid off. Man ager

27、s of SSP plc should develop and focus on it.Debtors Collecti on Period=Debtors/T urno ver x 3652003: 306,000/ 11,674,000 x 365= days2004: 452,000/ 13,382,000 x 365=daysTrend: In creaseAn alysis: It is a bad sig n that there is an in crease in DCP. It in dicates that SSPpoor credit con trol of poor i

28、nv oici ng system. The bad debts may also in crease. The leaders of SSP should check their invoicing and reminder system to keep the ratio a proper range.In vestme nt Ratios:In terest Cover=Profit Before In terest & Tax/ln terest Charges2003: 1,416,000/ 234,000=2004: 1,135,000/ 234,000=Trend: Decrea

29、seAnalysis: This ratio shows how capable the company is of covering its interest charges.The decrease isnot good because the compa ny is less able to meet its in terest payme nts. But the ratio is still in a reas on able ran ge. Leaders should try to in crease compa ny ratio a high level.Debt Ratio=

30、Total Debts/Total Assets x 100%2003: ( 767,000+ 1,560,000)/( 4,017,000+ 1,195,000) x 100%=%2004: ( 701,000+ 1,560,000)/( 4,318,000+ 1,248,000) x 100%=%Trend: DecreaseAn alysis: It is a good sig n that the ratio in creased. However, a healthy ratio should keep around 50%. It indicates that SSP has fe

31、wer liabilities or keeps more assets. The sign should be kept by man agers.3.Recomme ndati onAfter read ing and an alyz ing three acco unts from SSP Compa ny, I found some problems with it and now I will prese nt my suggesti ons about the future man ageme nt in these two parts.Operati onal recomme n

32、dati onA ratio of Net Profit Percentage shows us that SSP plc has a high expenditure in operation cost. It also indicates that the company has a low level of cost control. Therefore, I suggest that SSP should try to decrease the costs of sales and the operation cost, such as adopting new man ageme nt system and using con tractors to find distributio n cha nn els but to find them itself. Finan cial recomme ndati onFor the source of finance, SSP