HND项目专业大三财政预算答案报告参考Outcome3

HND商务会计高级outcome-3-4-5报告答案Index pageIndex page………………………………………..…. Introduction…………………………………………. Background………………………………………..…FindingsSection 1…………………………………………Section 2…………………………………………Section 3…………………………………………Conclusion………………………………………….. Reference…………………………………………….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 products. 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 that 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 chief executive’s memo of 30 December, here is my report summarising and analysising the financial position 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 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 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 get the statements.Section 2. Source of financesTo run a business, organizations require 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 from 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 period 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-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 suppliers and the customers may forfeit discounts.The credit is £544,000 in 2003 and it decreased to £405,000 in 2004. The percentage of decrease is 25.56%. 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 the 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 flexible 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.Long-term sources:1.Debentures:Debentures are loans make to companies that carry a fixed rate of interest. The company’s fixed assets normally secure debentures. Debentures have a fixed time period or an open time period. The shareholders are not debenture holders. A 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 the company’s fixed assets are steady.2.Ordinary shares:Ordinary shareholders receiving pay-outs from company after preference shareholders are paid. Ordinary share dividends are not fixed and subject to company’s periodical performances and decisions of management in paying dividend.In SSP Company, the ordinary share capital is £1,950,000 in both 2003 and 2004. It infers that the company has a steady operation situation.3.Retained ProfitsThe retained profit is the finance brought from the last financial 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 16.83%. The lower ratio shows us the company had made fewer profits in 2003 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 £984,000.2.Ratio AnalysisProfitability Ratios:Gross Profit Percentage=Gross profit/Turnover x 100% 2003: GPP=£7,000,000/£11,674,000 x 100%=59.96%2004: GPP=£8,037,000/£13,382,000 x 100%=60.06%Trend: IncreaseAnalysis: The increase of ratio is a good sign. The positive trend can be an indication that stock control of meat product has improved, demand for the meat product has increased after the diseases, or purchasing policies have improved. The managers should keep the good trend and go on develop it, such as improving marketing strategy, 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 x 100%=10.13%2004: NPP=£901,000/£13,382,000 x 100%=6.73%Trend: DecreaseAnalysis: The decrease of the ratio is a bad sign that it indicates a low profit of the company. From the P&L Account of the SSP plc, we know that although the gross profit increased, the operation cost is much higher in 2004; it leads to a decrease in net profit. So the managers should 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=1.562004: CR=£1,248,000/£701,000=1.78Trend: IncreaseAnalysis: the increase of ratio is a good sign. Generally speaking a healthy current ratio is at least 2:1. The 1.56 and 1.78 indicate the company is a little bit over trading and have difficulty in meeting its short-term debts. The main reason for the increase is the increase in the total current assets and decrease in the total current liabilities. I suggest 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=0.772004: (£1,248,000-£796,000)/£701,000=0.64Trend: DecreaseAnalysis: The decrease is a bad sign. The ratio should be 1:1. But the ratio in both of 2003 and 2004 is less that 1. And unfortunately, the ratio is still decreasing. SSP plc meets a liquidity problem that the liquid assets decrease. The company managers should pay attention t o this ratio and organization’s development.Efficiency Ratios:✧Fixed Asset Turnover=Turnover/Fixed Assets2003: £11,674,000/£4,017,000=2.91 times2004: £13,382,000/£4,318,000=3.10 timesTrend: IncreaseAnalysis: Where this ratio gas increase, this is a good sign. It indicates that the existing fixed assets are generating more sales and maybe investment in new fixed assets gas could 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 x 365=9.57 days2004: £452,000/£13,382,000 x 365=12.33 daysTrend: IncreaseAnalysis: It is a bad sign that there is an increase in DCP. It indicates that SSP’s may have 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 Charges2003: £1,416,000/£234,000=6.052004: £1,135,000/£234,000=4.85Trend: 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 interest payments. But the ratio is still in a reasonable range. Leaders should try to increase company’s profit to keep this ratio a high level.Debt Ratio=Total Debts/Total Assets x 100%2003: (£767,000+£1,560,000)/(£4,017,000+£1,195,000) x 100%=44.65%2004: (£701,000+£1,560,000)/(£4,318,000+£1,248,000) x 100%=40.62%Trend: DecreaseAnalysis: It is a good sign that the ratio increased. However, a healthy ratio should keep around 50%. It indicates that SSP has fewer liabilities or keeps more assets. The sign should be kept by managers.3.RecommendationAfter reading and analyzing three accounts from SSP Company, I found some problems with it and now I will present my suggestions about the future management in these two parts.Operational recommendationA ratio of Net Profit Percentage shows us that SSP plc has a high expenditure inoperation 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 management system and using contractors to find distribution channels but to find them itself.Financial recommendationFor the source of finance, SSP has a bad performance of financial operating. In the Cash Flow Statement, the Financing is £0, but the company is planning expansion in Glasgow. The main inflow of the company is the sales. It is a dangerous phenomenon if the company wants to use the turnover to expanse its business because it is impossible to use the current cash to support long-term investment. So I suggest that the company may increase the number of share capital or make more debentures to get more long-term capital for expansion.ConclusionBy analyzing the P&L Account, Balance Sheet and Cash Flow Statement, we can infer that SSP plc has a good operational performance. However, there are still many parts to improve and develop to help the company maximize profits.Reference●Ray H. Garrison, Managerial Accounting, Business Publications Inc., 1985, Printed inU.S.A.●J.R.DYSON, Accounting for Non-accounting Students, Financial Times, 2004, Printed inGreat Britain.●Frank Wood & Alan Sangster, Business Accounting 2, Financial Times, Pitman Publishing,1999, Printed in China.●。

Index pageIndex page………………………………………..…. Introduction…………………………………………. Background………………………………………..…FindingsSection 1…………………………………………Section 2…………………………………………Section 3…………………………………………Conclusion………………………………………….. Reference…………………………………………….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 products. 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 that 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 chief executive’s memo of 30 December, here is my report summarising and analysising the financial position 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 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 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 get the statements.Section 2. Source of financesTo run a business, organizations require 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 from 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 period 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-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 suppliers and the customers may forfeit discounts.The credit is £544,000 in 2003 and it decreased to £405,000 in 2004. T he percentage of decrease is 25.56%. 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 the 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 flexible 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.Long-term sources:1.Debentures:Debentures are loans make to companies that carry a fixed rate of interest. The company’s fixed assets normally secure debentures. Debentures have a fixed time period or an open time period. The shareholders are not debenture holders.A 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 the company’s fixed assets are steady.2.Ordinary shares:Ordinary shareholders receiving pay-outs from company after preference shareholders are paid. Ordinary share dividends are not fixed and subject to company’s periodical performances and decisions of management in paying dividend.In SSP Company, the ordinary share capital is £1,950,000 in both 2003 and 2004. It infers that the company has a steady operation situation.3.Retained ProfitsThe retained profit is the finance brought from the last financial 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 16.83%. The lower ratio shows us the company had made fewer profits in 2003 then it was in 2002.Section 3. Ratio Analysis1.Major inflows is Net cash flow op erating activates of £1,345,000.Major outflow is Payments to acquire fixed assets, which takes £984,000.2.Ratio AnalysisProfitability Ratios:✧Gross Profit Percentage=Gross profit/Turnover x 100%2003: GPP=£7,000,000/£11,674,000 x 100%=59.96%2004: GPP=£8,037,000/£13,382,000 x 100%=60.06%Trend: IncreaseAnalysis: The increase of ratio is a good sign. The positive trend can be an indication that stock control of meat product has improved, demand for the meat product has increased after the diseases, or purchasing policies have improved.The managers should keep the good trend and go on develop it, such as improving marketing strategy, setting better pricing policy, or improving stock control.✧Net Profit Percentage=Net Profit before T axation/ Turnover x 100%2003: NPP=£1,182,000/£11,674,000 x 100%=10.13%2004: NPP=£901,000/£13,382,000 x 100%=6.73%Trend: DecreaseAnalysis: The decrease of the ratio is a bad sign that it indicates a low profit of the company. From the P&L Account of the SSP plc, we know that although the gross profit increased, the operation cost is much higher in 2004; it leads to a decrease in net profit. So the managers should 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=1.562004: CR=£1,248,000/£701,000=1.78Trend: IncreaseAnalysis: the increase of ratio is a good sign. Generally speaking a healthy current ratio is at least 2:1. The 1.56 and 1.78 indicate the company is a little bit over trading and have difficulty in meeting its short-term debts. The main reason for the increase is the increase in the total current assets and decrease in the total current liabilities. I suggest 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=0.772004: (£1,248,000-£796,000)/£701,000=0.64Trend: DecreaseAnalysis: The decrease is a bad sign. The ratio should be 1:1. But the ratio in both of 2003 and 2004 is less that 1. And unfortunately, the ratio is still decreasing. SSP plc meets a liquidity problem that the liquid assets decrease. The company managers should pay attention to this ratio and organizatio n’s development.Efficiency Ratios:✧Fixed Asset Turnover=Turnover/Fixed Assets2003: £11,674,000/£4,017,000=2.91 times2004: £13,382,000/£4,318,000=3.10 timesTrend: IncreaseAnalysis: Where this ratio gas increase, this is a good sign. It indicates that the existing fixed assets are generating more sales and maybe investment in new fixed assets gas could 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 x 365=9.57 days2004: £452,000/£13,382,000 x 365=12.33 daysTrend: IncreaseAnalysis: It is a bad sign that there is an increase in DCP. It indicates that SSP’s may have 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 ratio a proper range.Investment Ratios:✧Interest Cover=Profit Before Interest & Tax/Interest Charges 2003: £1,416,000/£234,000=6.052004: £1,135,000/£234,000=4.85Trend: 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 interest payments. But the ratio is still in a reasonable range. Leaders should tryto increase company’s profit to keep this ratio a high level.Debt Ratio=Total Debts/Total Assets x 100%2003: (£767,000+£1,560,000)/(£4,017,000+£1,195,000) x 100%=44.65%2004: (£701,000+£1,560,000)/(£4,318,000+£1,248,000) x 100%=40.62%Trend: DecreaseAnalysis: It is a good sign that the ratio increased. However, a healthy ratio should keep around 50%. It indicates that SSP has fewer liabilities or keeps more assets.The sign should be kept by managers.3.RecommendationAfter reading and analyzing three accounts from SSP Company, I found some problems with it and now I will present my suggestions about the future management in these two parts.Operational recommendationA ratio of Net Profit Percentage shows us that SSP plc has a high expenditure inoperation 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 management system and using contractors to find distribution channels but to find them itself.Financial recommendationFor the source of finance, SSP has a bad performance of financial operating. In the Cash Flow Statement, the Financing is £0, but the company is planning expansion in Glasgow. The main inflow of the company is the sales. It is a dangerousphenomenon if the company wants to use the turnover to expanse its business because it is impossible to use the current cash to support long-term investment.So I suggest that the company may increase the number of share capital or make more debentures to get more long-term capital for expansion.ConclusionBy analyzing the P&L Account, Balance Sheet and Cash Flow Statement, we can infer that SSP plc has a good operational performance. However, there are still many parts to improve and develop to help the company maximize profits.Reference●Ray H. Garrison, Managerial Accounting, Business Publications Inc., 1985, Printedin U.S.A.●J.R.DYSON, Accounting for Non-accounting Students, Financial Times, 2004,Printed in Great Britain.●Frank Wood & Alan Sangster, Business Accounting 2, Financial Times, PitmanPublishing, 1999, Printed in China.。

Case Study 11List the main business organizations recognized by Scots Law.知识点：商务组织的分类思路：先说出商务组织分为三大类：sole trader, partnership, company然后partnership具体说有三种:Ordinary/traditional/unlimited partnership 最后说company 具体分为private limited company 和public limited company来源：B5小本资料P272~2732Given the fact that Lisa will be running the business herself and, for the time being, she is unlikely to be employing anyone, how would you classify her business?知识点：sole trader的特点思路：回答问题说Lisa应该建立sole trader,然后解释原因：建立sole trader不需要double taxation、启动资金少、不需要政府相关部门审批等原因打乱写3Identify two advantages and two disadvantages of the type of business organization run by Lisa.知识点：Sole trader的优点和缺点最好是四个优点加四个缺点来源：B5小本资料P272或者A4材料1 P1〜P3推荐用这个材料答案更清晰一下每个优缺点下面有三句解释随机选择一个来写解释上面的小标题Case Study 21What are the main differences between a traditional partnership and a limited liability partnership?知识点：无限合伙人（Unlimited partnership UP & limited liability partnership LLP）和有限责任合伙人之间的区别思路：1,法案不同UP: the Partnership Act 1890 （在A4 材料 1 P287） LLP： The limited liability partnership Act 20002.责任不同UP: Unlimited liability LLP: limited liability3.合伙人名称不同UP: Partners LLP: members4.设立条件不同：UP: there are no formal legal requirements for setting up a partnership LLP: forming an LLP is more expensive and complicated than setting up a unlimited partnership （书上原话记得更改语序等）5.UP: partnership agreement is no necessary to have. LLP: LLP agreement is necessary/must.6.UP: not necessary to reveal LLP: have to/must reveal financial information来源：2版书P198〜P201、3版书P209〜P213；再加上课堂笔记；B5小本资料P290以上6个不同点，随机选四个去答打乱顺序改变语序2What is the main advantage for an existing partnership when it changes to a limited liability partnership?知识点：从无限责任更改成有限责任的最主要的好处是责任的改变思路：回答问题说明最主要的好处是责任的不同然后具体说明两个partnership的责任上有什么不同之处UP:责任是unlimited liability并且是无限连带责任（2版书P199第二段第四行到第六行；3版书P210倒数第三行到P211第一行）LLP:责任是limited liability是因投资额为限（2版书P200倒数第四段全部；3版书P212 第三段全部）3What is the nature of the legal relationship between partners in a firm and members of a limited liability partnership?知识点：法律关系是诚心关系fiduciary relationship思路：回答问题the nature of the legal relationship is fiduciary relationship,然后说partner 代表的是公司和合伙人member代表的是只是公司先例：（A4 资料1P9 中间部分）Law v Law [1905] 1 Ch 140来源：A4资料1P9Case Study 31What is a company9s objects clause?知识点：公司备忘思objects clause的概念（A4资料2 P2总共有两个概念2选1或者写书上的2版P229 倒数第三段3版P241倒数第四段）然后写ultra vires （和公司备忘的概念在同一处）来源：A4资料2 P2、2版书P229倒数第三段3版P241倒数第四段2Does MacGregor have the right to withdraw from the project with Construct it?知识点：Ultra vires rule思路：回答问题：没有权利取消；在现代条款，在不违反法律的前提下，公司经营范围是无限制的；法案是the Company Act 1989&2006； ultra vires rule没意义没有权限限制；Macgregor很难胜诉协议继续履行在历史上有一个old ultra vires rule越权无效原则；写出这个的概念（A4资料2 P3或2版P229 3版P241）；如果法官参照这个原则那么这个project可以被withdraw；但是这是案例法成文法优先于案例法所以法官需要参照成文法MacGregor很难诉赢先例：A4 资料 2 P3-----------------------------------Ashbury Railway Carriage & Iron Co. V. Riche （1875）来源：A4资料2P3； 2版P229、3版P2413Will the legal action by MacGregor shareholders be successful so that the company will be forced to pay out the expected bonuses?知识点：公司章程思路：回答问题：股东不能要求公司进行分红；根据公司章程，股东没有绝对的权利分红; 公司章程的性质是合同，是公司和股东之间&股东和股东之间的合同；股东没有绝对权利要求分红，公司可以不分红，并没有违约先例：Wood v Odessa Waterworks Co （1889）或者Hickman v Kent or Romney Marsh Sheep Breeders Association [1915]二选一（2 版P237> 3 版P250）来源：2版P237、3版P250Case Study 41List three differences between a private company and a public company知识点：两种公司的区别思路：最好列出4个区别至少3个随机选择来源：A4资料2 P1~P2； B5小本资料P309-P3102Can people simply decide to set up any kind of company and begin to trade immediately?知识点：公司设立的条件思路：回答问题：不能自己决定成立公司并且立刻交易；公司不能自己成立，公司成立需要进行注册；公司成立的5步骤；来源：2版P226, 3版P2383What kind of legal status is a company said to have?知识点：公司的法律地位思路：公司的法律地位是legal entity加上legal personality;公司是一个与其股东相分离的独立的法人；先例：Salomon v A Salomon & Co Ltd 1897 （2 版P217~P218、3 版P229-P230）（判决部分从第二段的第六行“However,^后面写到这段结束）来源：2 版P216~P218、3 版P228-P2304What management body is responsible for the day-to-day running of a company?知识点：公司谁responsible思路：Ltd 是所有股东responsible； Pic 是all employee responsible; employee 其中分为managers 和directors5What is the most common type of liability for company members?知识点：公司股东的责任思路：普遍的责任类型是有限责任；限于股东的出资额和股数；来源：2 版P200+P230, 3 版P212+P242注：1. 2版书和3版书得区别在封皮右上角2.A4材料1指材料开头有四行加粗的标题3.A4 材料2 指材料开头为Private limited company vs. Public limited company。

A financial analysis report for Tricol plcOutcome 3and4Class;10E6Name:Ma bodaSCN:125099297Candidate Num:22IntroductionTo operate better in financial aspect, the management of Tricol plc asked me to analyze their financial condition then make recommendations for them.FindingsPart A(ⅰ) Flex budget in line with actual activityTricol plc Flexed Budget for JuneOriginal budget FlexedbudgetActualresultsVariance2000 units 1600 units 1600unitsF/A￡￡￡￡Direct material 80,000 64,000 61,600 2,400 F Direct labor 36,000 28,800 35,200 6,400 A Variable productionoverhead4,000 3,200 3,200 0 Fixed costDepreciation 1,500 1,500 1,500 0 Rent and rates 2,500 2,500 2,500 0 Administration overhead 2,000 2,000 2,200 200 A Insurance costs 2,200 2,200 2,400 200 A Total 128,200 104,200 108,600 4,400 A(ⅱ) Variances calculationDirect material total variance(Standard units of actual production*standard price) －(actualquantity*actual price)(4 kg*1,600*￡10) －￡61,600 =￡ 2,400 (F)Rate of significance: (3.75%)Direct material usage varianceStandard price*(standard units of actual production － actual quantity) ￡ 10*[ (4kgⅹ1,600) －5,600kg]= ￡8,000 (F)Rate of significance (12.5%)Direct material price varianceActual quantity * (standard price － actual price)5,600kg*[￡ 10 －(￡61,600/ 5,600kg) ]= ￡ (5,600) (A)Rate of significance: (8.75%)Direct labour total variance(Standard hours of actual production*standard rate ph) - (actual hours*actual rate ph)[ (2hrs*1,600) *￡9]－￡35,200=￡(6,400) (A)Rate of significance: (22.22%)Direct labour efficiency varianceStandard rate ph* (standard hours of actual production － actual hours) ￡9*(2hrs*1,600－3,520hrs)=(2,880) (A)Rate of significance: (10%)Direct labour rate varianceActual hours*(standard rate ph – actual rate ph)3,520hrs*(￡9*－￡35,200/3,520hrs)= ￡(3,520) (A)Rate of significance: (12.22%)Total overhead varianceTotal standard overhead for actual production － total actual overheads (￡18,000/12+￡2,500+￡2,200+￡2,000)- (￡1,500+￡2,500+￡2,200+￡2,400)=￡(400) (A)Rate of significance: (3.5%)(ⅲ) Report about variancesDirect material varianceThe direct material total variance can be analyzed in two aspects which are direct material volume and direct material price.For volume side, as calculated above, the budget volume is 6400kg; the actual volume is 5600kg. So there is 800kg variance which is favorable and each unit variance is 0.5kg. The likely reason causing the variance comes from three aspects. First of all, the company upgraded the production machinery recently, and new machine may use materials efficiently, so it reduced the waste of materials. Secondly, the company switched suppliers and using higher-grade materials can decrease wasteof materials too. Finally, the company has concluded ahigher-than-expected wage settlement for production operatives, which will maintain employees with higher skills as well as decrease turnoverof employees, and it also can increase efficiency in using materials.For price aspect, the budget price is ￡10 per kg, and the actual priceis ￡11per kg, it is adverse that one pound over the budget price. The company switching suppliers may cause the increase of negotiation cost. There may be a long-term relationship between Tricol plc and its old suppliers, so the suppliers may take lots of discounts to the firm. Afterchanging suppliers, the discount may disappear. Furthermore, higher grade materials increased unit price.Overall, the total material variance is favorable. ￡8,000 －￡5,600=￡2,400.Direct labour varianceThe direct labour total variance is composed of direct labour efficiency variance and direct labour rate variance.The budget direct labour hours are 3,200hrs and the actual labour hours are 3,520 hrs. There are more 320hrs needed than the budget, and each unit is 0.2hrs, which it is obviously adverse. The company upgrading the production machinery may need time for employees to adopt it. Also, employees need training time. The rebuild process of machinery consumed time too. In a word, the chargeable hours have increased.The budget direct laour hours rate is ￡9 per hour, the actual hours rate is ￡10 per hour. It is adverse that one pound higher than budgeted. It is possible caused by both internal and external factors.Higher-than-expected wage settlement may be internal reason for the variance, and new machinery may be needed to recruit new employees to operate the machinery, which also can increase the expense. For external factors, the changing of labour market may increase labour cost; the government legislation also can increase the labour cost, for example minimum pay.Both direct labour efficiency and direct labour rate variances are adverse, so the direct labour total variance is adverse.✧Overhead varianceAs calculated above, total overhead variance is caused by administration and insurance. Each factor has ￡200 variance, so the total overhead variance is ￡400 and it is adverse. During the process of changing supplier, the company needed more expense on public relationship or negotiation, in addition, in order to maintain the new machinery, administration cost will be increased too. For insurance aside, the improvement of machinery will need more insurance fees to cover, which also contributes to the increase of insurance fee of new employees.Part B◆Selection and application of two investment appraisal techniquesAs the company is keen to recoup the cost of the investment within five years, I will choose Payback period and Net Present Value to help me complete the appraisal.In order to fulfill the appraisal easily, there are some assumptions listed below should be considered before the appraisal.⑴ All revenue and inflow are assumed cash flow⑵ All investment cost incurred in year 0⑶ No uncertainty is considered⑷ Do not consider inflation and taxation⑸ Market rate of return is expected rate of return⑹ Rate of return is varying along with timeTricol plc Payback period for project distribution armYear Net cash flow Cumulative Cash Flow￡￡Cash Flow Year 0 (1,000,000) (1,000,000) Cash Inflow Year 1 160,000 (840,000)Year 2 160,000 (680,000)Year 3 320,000 (360,000)Year 4 320,000 (40,000)Year 5 320,000 280,000 Net Cash Benefit Year 5 280.000 Note: req uire 40,000/320,000 in year 5= 1/8*year=1.5 mothsPayback=4 years 1.5 mothsTricol plc Net Present Value for project distribution armPresent Value Annual cash flow Present valuefactors at 10%￡￡￡Year 0 (1,000,000) 1.000 (1,000,000) Year 1 160,000 0.909 145,440Year 2 160,000 0.826 132,160Year 3 320,000 0.751 240,320Year 4 320,000 0.683 218,560Year 5 320,000 0.621 198,720 935,200 NPV (64,800)◆Recommendation about investmentAccording to Payback Period analysis, the investment cost can be recouped in year 4 and 1.5 moths. In other words, the period is under company’s expectation. The project can be executed. However, according to Net Present Value analysis, in terms of present value, within five years, what the NPV will bring net result is net cash loss but not net cash surplus. In general, the company should consider time value and other factors, so the project should not be executed.◆Factors impact on the investment should be consideredVarious factors will impact on result of investment. I will outline factors should be considered when the management reviewing my recommendation in financial and non-financial factors.✧Financial factorAs distribution arm is financial long-term beneficial project, it can be used inlong-term period and bring benefits continuous. The investment cost is ￡1,000,000, which can be considered a large investment. So it more likely needs long period payback period. The management should focus on longer cash flows for longer period of future. On the other hand, Net Present Value in year five is (28,000) only take 2.8% percents of the investment cost, it is more likely surplus in year six. Another financial factor is source of million pounds. If it is internal source, the management mainly concentrate on opportunities cost. If it is cost of capital or cost of capital taking much weight of the source, the management must pay costof the source firstly, the marketing rate of return likely low for the company, in addition, the management should use higher discounted cash flow.Non-financial factorThe investment must be consistence with company’s strategic plan. As Tricol is a plc, it must take social responsibility such as obeying government policy, minimizing impact on environment and minimizing impact on natives.ConclusionFor real competition is more complex and fierce, in order to make accurate decisions, management should consider more factors during the decision-making; furthermore, the management should use more tools to help them such as IRR, DCF.。

Outcome 31. What is meant by public goods and merit goods? Give an example of each.Merit Goods: The Government provides services that might not be provided by the private sector in sufficient quantities or of a sufficient quality, for example, health services and education. These are commonly referred to as Merit Goods.For example: 1. Beijing International Studies University.Public Goods: These are commodities, which would not be provided by the private sector because they would find that many people, even if they benefited from them, would refuse the finance through taxation. The level of spending allocated to public goods varies and will depend on many things such as needs and circumstances and political philosophies.For example: 1. Street lamp.2.Explain why the Government allowed the merger of Carlton and Granada while refusing Tesco, Sainsbury and ASDA the opportunity of taking over Safeway.Because of TV isn’t maintaining products of the p eople’s living standard. And merger will be saving cost and rational use of resources. The main incomes are from enterprise income of Carlton and Granada. Customers aren’t main income of Carlton and Granada. Within this field, Government encourages merger to integration of resources. According to economic theory, we know that a scale monopoly is where at least a person or company supplies 25 percent or more of the goods or services of a particular type in UK. In this case, Tesco, Sainsbury and ASDA of the three companies in any one company merger of Safeway, after merger of company’s supplies will over 25 percent. The three companies will increase power after merger lead to monopoly. Because of monopoly will be threatened to benefits of customers. Therefore, the Government refuses Tesco, Sainsbury and ASDA the opportunity of taking over Safeway. On the other hand, Morrisons is a smaller than Tesco, Sainsbury and ASDA. Even if Morrisons merger Safeway, it supplies can’t more than 25 percent. Therefore, Government encourages Morrisons merger Safeway will be grow market share and improve competitive strength of Morrisons. And Morrisons have power participate competitive with other three companies. And customers will get benefits from monopoly between companies. On the other hand, products of supermarket are closely related with the household, they are direct impact on consumption level, decreasing competitive lead to increasing price to against benefits of customers.Therefore, Government allowed the merger of Carlton and Granada while refusing Tesco, Sainsbury and ASDA the opportunity of taking over Safeway.3. Government use taxation policy to regulate ‘negative externalities’. One of these isa tax on fuel used in transport. Explain why governments tax fuel and how it affects the transport market in the UK.The fuel cost and fuel tax are increasing must impact traffic. On the surface, thegovernment improves tax on fuel. In fact, the UK Government is improving price of fuel. According demand rules, we know that price increasing lead to lower demand. Therefore, after increasing price of fuel lead to drivers reduce. If people will drive as little as possible, it will be relieve traffic to bring good environment.。

Report on Appropriate Appraisal Scheme forA G Bell Ltd.I.IntroductionA G Bell Ltd, based in High Town, Scotland, is a private sector company specializing in 24/7 call center services. Besides, the company has a reputation throughout the industry for benefits to their staffs.This report will provide the basic information on variety of Appraisal Schemes and the sound advice on the most appropriate approach to appraise employees at A G Bell Ltd for managers.II.Findings1. a. What would be A G Bell Ltd’s key objectives in introducing an appraisal system?When introduce an appraisal system at A G Bell Ltd, the key objectives may include below:At first, to recognize the employees’ current job performance level, e.g. to identify the A G Bell’s disabled workers’ skills they majored and the conditions that the tasks they have finished. Next, to discuss the approaches that would be able to keep or even enhance their performance levels, e.g. the appraiser in A G Bell ought to exchange the idea on performance levels with the appraisees, additionally, the appraiser must face to one appraisee only in the appraisal meeting and vice versa. Then, to supply the feedbacks for the appraisees and motivate them, e.g. the line managers are supposed to provide the feedbacks on performance levels to the workers with criminal recordsof A G Bell Ltd.Furthermore, the objectives are also to identify the staffs’ training needs, especially focus on their career developments, e.g. A G Bell Ltd’s appraisal meeting would be able to acquaint the black minority ethnic workers’ training and development needs so that supply the opinions for enhancing their performance. Moreover, to agree the performance objectives related to achievement of the organization’s overall goals, e.g. the line managers will introduce the whole objectives need to be done by an individual for their workers and these jobs must be related to the A G Bell Ltd’s overall goal. In addition, to recognize the employees’ potential and release the related information to the HR Dept for planning process, e.g. the appraisal meeting in A G Bell Ltd can provide information about an employee’s potential for promotion and their career prospects within the organization.1. b. What are the advantages and constraints of most appraisal systems?Appoint to most appraisal systems, the advantages include below:●They would be able to supply the information for managers to make decisions●They can help with process of planning, resources allocation and solvingproblems●They play an crucial role in implementing and managing change●They are beneficial at promoting team-building and improving inter-personalrelationship●They provide a formal two-way communication mechanism, furthermore, theyassist with the communication and achievement of organizations●They may recognize the employees’potential as well as the training anddevelopment needsIn the meantime, the constraints or disadvantages of most appraisal systems can be seen below:●They are generally time-consuming to carry out, and as a result, they often costa considerable of costs to maintain and develop themselves●By utilizing these systems, the staffs often need to receive lots of training forparticipating competently, because that most of the employees are not skillful during the appraisal process, and this phenomenon may lead to a lack of trust●Inappropriate or irrelevant measures of performance often incurredaccompanied with the implementation of the appraisal systems●The employees usually pay their attention on achieving the objectivesestablished by the appraisers, but ignore their initial job descriptions, and as a result, the quality of appraisal result is often compromised between these two parts●The employers or the managers may give lip services to the appraisal systemsinstead of connecting the personal objectives with the organization’s goal2. a. Describe 4 types of appraisal scheme and outline the roles of the individuals i nvolved in each type of scheme.Generally speaking, there are six popular types of appraisal schemes, and they are Overall Assessment, Self Appraisal, Sliding Scales of Grading, Behaviorally Anchored Rating Scales (BARS), 360-Degree Appraisal and Consultant Appraisal.Self Appraisal: in the self appraisal model, each individual carries out their own self-evaluation as a major input into the appraisal process. In order to do this in a reasonably objective manner, employees obtain data for appraising their strengths and weakness. The types of data that would be relevant in the appraisal process will varyaccording to the job role of the appraisee.Sliding Scales of Grading: sliding scales of grading have several of forms, but they all aim to rate employees. Rating scales involve identifying aspects or elements contributing to job performance in each job role, and attaching a numerical or alphabetical score to them.There are commonly two major types of rating scales which illustrated below:1—2—3—4—5—6—7—8—9—10, andLOW________________A VERAGE_________________HIGHDuring the process of appraising, the appraisees will be scored in each of the small tasks on individual’s performance, and then, the line managers will give the feedbacks to the appraisees.Behaviorally Anchored Rating Scales: BARS is another category of rating scale that is more sophisticated than the sliding scales. This scale concentrates on employee behavior, which is measured against typical behavior in each of the elements of the job. The scale attempts to rate performance, for example in terms of excellent, good, fair and poor, but for each of these categories and for each job element.360-Degree Appraisal: this type of appraisal involves gathering information, usually through questionnaires, from a range of sources including peers and subordinates as well as the appraisee’s supervisor and more senior managers if appropriate. Furthermore, the process of appraisal must be fair, and that means the HR Dept ought to arrange the same time and the proper location to carry out the appraisal.Based on the statements above, the specific roles of the individuals involved in each type of the schemes will be illustrated in the table below:2. b. Recommend the type of appraisal scheme that would be most appropriate for A G Bell Ltd, and explain the reasons for your choice.From what has been stated above, the Sliding Scales of Grading may be the most appropriate appraisal scheme to assess the employees of A G Bell Ltd.In the first place, the staffs consist of Black Minority Ethnic workers, disabled workers and workers with criminal records, and so, by using the scales, the performance levels of each worker can be described clearly.Besides, the company has employed staffs up to 180, and the use of scales can help with relatively saving cost implication in comparison with other appraisal schemes like 360-Degree and Consultant Appraisal. Furthermore, based on the amount of staff, Sliding Scales is beneficial at saving time through an assessment for all staffs in the same time.3. Prepare a set of guidelines to issue to managers in A G Bell Ltd in respect of best practice in appraisal, making reference to the key legislation.Generally speaking, a successful practice in appraisal may contain four crucial steps, and they are Preparation, During the Meeting, the Tasks should be done before the close of the Meeting and the Meeting Follow-Up.As for A G Bell Ltd, the best practice in appraisal may concentrate on four main parts below:Preparation:Arrange one time unified appraisal, through scales, for all the workers in A G Bell Ltd to obtain information, and note that they must finish it in the same time and the similar locations in order to ensure the fair of the appraisal. The appraisees need to complete the Part A while appraisers need to finish the Part Bduring the appraisal test.●Prepare the times and rooms for appraisal meeting, in addition, ensure that theatmosphere is comfortable and relaxed for appraisees without interruptions, e.g.the appraisee only need to face to one appraiser●Prepare the relevant papers, e.g. the appraiser need to get the appraisee’s lastappraisal record (if appropriate) and check it, moreover, the training and development records which contain any training and development activities noted●Send any pre-appraisal documentation to the appraisees in order to ensure thatthey have enough time to prepare the appraisal meeting●Inform the appraisees in advance the time and locations of the appraisal meeting●Provide adequate and proper training course for the appraisers and appraiseeswho involved in the appraisal processPrivacy and Confidentiality:●Arrangements must be maintained in an appropriate degree of confidentiality.For example, the appraiser in A G Bell ought to keep a secret with the physical conditions of a disabled worker as well as the grades agreed during the meeting●Arrangements are supposed to store completed appraisal documentation, i.e. theappraiser must assure that the documentation is securely stored to ensure confidentiality. E.g. the archives of black workers must be guarded by special guardsInterview Structure:●Both parties who involved in the process of appraisal must be aware of theproposed structure of interview, and that means they need to receive the proper training for participating competently in the appraisal meeting●Appraisers are supposed to endeavor to ease the appraisees’ tension and make afriendly and informal discussion with the appraisees. i.e. the two parties should listen to each other patiently, and appraisers need to encourage the appraisees to talk and recognize the potential barriers to accomplish performance targets as well as solutions●Appraisers ought to try their best to avoid the common errors within theinterviewer process, e.g. the line managers should not make overly subjective decisions in terms of the employees’rating scores, especially appoint to the disabled workers in A G Bell Ltd●It is important that the process must be ensured do not unlawfully discriminatein light of the employees’grounds of sex, race or disability, especially in A G Bell. In addition, the relevant legislation contains the Sex Discrimination Act (SDA), the Race Relations Act (RRA) 1976, the Disability Discrimination Act 1995 and other Codes of Practice produced by the relevant commissions like the Commission for Racial Equality (CRE)As a matter of fact, the interview structure relies on the form of appraisal schemes used. Most of schemes will incorporate an element of goal setting, and this ought to be done jointly during the appraisal meeting.Follow-Up:●Appraisers will finish the proper in-house documentation based on thecompletion of their progress during the meeting. After that, appraisees should agree time deadlines with the appraisers, and that means the appraisees need to improve their performance in a certain period of time after the interviewSome arrangements need to be made for the appraisees to follow up any training and development needs. For example, the company may arrange some training courses for the workers with criminal records to improve their performanceAt last, the appraisal should be ongoing, not just a one-off annual event, and that means the participants involved in the process of appraisal must ensure that they carry out the action plan as agreed. In addition, the appraisers should monitor the progress achieved by appraisees in certain period of time.III.ConclusionsThe company of A G Bell should adopt Sliding Scales of Grading to appraise all of their employees, and besides, the organization also needs to obey the relevant regulations or legislations during the process of appraisal. Furthermore, the company should continue to provide the excellent benefits to their staffs based on the fair and justice.。

IntroductionThis report shows the variances of direct material total, usage, price, direct labor total, rate, efficiency, and total overhead by a table and of flexed budget. And also give the recommendation and conclusion.Flex budgetVariances analysisThe direct material usage variance is 8000(F), it shows that the flexed budget is￡8,000 more than the actual cost,as a result of the using of higher-grade materials and changing of the way of production.The direct material price variance is 5600(A), which means that the actual price is￡5600 more than the flexed budget price, because of the Tricol PLC had changed their supplier and purchase the higher-grade material lead to the price raised from ￡10 per/kg to￡11 per/kg.The direct material total = direct material usage – direct material price.As calculated above, 8000-5600=2400, the direct material total variance is￡2400.The direct labor rate variance is 3520(A), which means that the actual labor rate is￡3520 more than the flexed budget, caused by the company supplied a higher-than-expected wage, the labor cost raised from￡9 per hour to￡10 per hour, and may because Some employees still apprentices, with poor efficiency.The direct labor efficiency variance is 2880(A), as to say, the actual labor efficiency is￡2880 more than flexedbudget efficiency.It may be because the machine on the production line equipment getting old and it influence the efficiency of employees at the time of production, or maybe the culture of the company is not so well at current time, which result in reduced efficiency.The direct labor total variance is 6400(A) caused by the labor rate variance and efficiency variance. It shows that the actual total labor is ￡6400 more than the flexed budget total labor.The total overhead variance is 400(A) that means the actual total overhead is ￡400 more than flexed budget, which caused by the changing of administration overhead and insurance cost both. These two things may change by the company change the salary of the management, and they may add extra insurances for the employees or the machinery.ConclusionThere is a policy of the company in which the company applies a rate of significance of 3% for any Variance analysis. According to the data above, we can clearly seethat all the actual variances are higher than 3%, it may caused by the actual production for June was 80% of the target amount, and there are some respects had been changed in the factory.RecommendationI’d give some advices to Tricol Plc for improving their business.●To improve the efficiency not only by increase thesalary but also change the way of production.●The company may discuss with the new supplier to lowerraw material prices.●Training a group of experienced staff.Appendix1. Direct material total variance(Standard units of actual production *standard price) - (actual quantity* actual price)10*4*1600- 61600=2,400(F) 2400/64000=3.75%2. Direct material usage varianceStandard price*(standard units of actual production –actual units)10*(4*1600-5600) =8,000(F) 8000/64000=12.5%3. Direct material price varianceActual quantity *(standard price –actual price)5600*(10-11) =5,600(A) 5600/64000=8.75%4. Direct labor total variance(Standard hours of actual production*standard rate ph) –(actual hours*actual rate ph)2*1600*9-35,200=6400(A) 6400/28800=22.22%5. Direct labor efficiency varianceStandard rate ph*(standard hours of actual production- actual hours)9*(1,600*2-3,520) =2880(A) 2880/28800=10%6. Direct labor rate varianceActual hours*(standard rate ph-actual rate ph)3520*(9-10) =3,520(A) 3520/28800= 12.22%7. Total overhead varianceTotal standard overhead for actual production- total actual overheads(1600*2-3,200) - (8,200-8,600) =400(A) 400/ (3200+8200) =3.51 %。

Assessment task instructionsAnswer the following questions:;1 What is meant by public and merit goods? Give an example of each2 Explain why the Government allowed the merger of Carlton and Granada whileerefusing Tesco, Sainsbury and ASDA the opportunity of taking over SafewayAlternative to Question 2 (Sampling3 Governments use taxation policy to regulate ‘negative externalities One of these is a tax on fuel used in transportExplain why governments tax fuel and how it affects the transport market in the UK1. The advantage is very good social expected, but could not produce if left to the private enterprise,Such as education.Public interest is good, can be everyone. Won;t provideBecause the free riders in the free market, "such as streets and squares lighting.2. The answer should solve this area of the market failure and government intervention reasons.The cause of the market failure should include:restricted competitionno provision of public goodsinsufficient provision of merit goodsexternalities ignoredReason to refuse the supermarket buy:create a leading company too big market share restriction Competition and consumer will cause no too many choices, pay higher pricewill also suffer from stress supplier powerful new companyReason: allow television mergerDifferent types of market supermarket.market is being too much competitionThis is the spread of limited advertising revenue is too thinlyThe new company has powerto produce new products, obtain higher efficiency and reduce the cost 3.Is to improve fuel tax income, but also as a tax on externalities. Externality is explanations should be included.Spent fuel help pollution is a negative externalities. costEach people whether they use and cost of the transportationThe government tax fuel to cover the cost of the externalities. (Pigovian tax).Use transportation fuel burning more expensive, the government hopesTo reduce the use of cars and trucks jams, so as to reduce accident and pollution.Higher fuel costs encouraged consumers to use public transport and suppliersLow demand for more fuel-efficient offset development method.。

—Index pageIndex page………………………………………..…. Introduction…………………………………………. Background………………………………………..…Findings》Section 1…………………………………………Section 2…………………………………………Section 3…………………………………………Conclusion………………………………………….. Reference…………………………………………….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 products. 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 that 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 chief executive’s memo of 30 December, here is my report summarising and analysising the financial position 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 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 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 information they use to get the statements.…Section 2. Source of financesTo run a business, organizations require 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 from 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 period 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-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 suppliers and the customers may forfeit discounts.）The credit is £544,000 in 2003 and it decreased to £405,000 in 2004. The percentage of 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 the 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 flexible 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.Long-term sources:1.Debentures:Debentures are loans make to companies that carry a fixed rate of interest. The company’s fixed assets normally secure debentures. Debentures have a fixed time period or an open time period. The shareholders are not debenture holders. A 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 the company’s fixed assets are steady.2.Ordinary shares:Ordinary shareholders receiving pay-outs from company after preference shareholders are paid. Ordinary share dividends are not fixed and subject to company’s periodical performances and decisions of management in paying dividend. In SSP Company, the ordinary share capital is £1,950,000 in both 2003 and 2004.It infers that the company has a steady operation situation.3.Retained ProfitsThe retained profit is the finance brought from the last financial 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 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 £984,000.2.Ratio AnalysisProfitability Ratios:Gross Profit Percentage=Gross profit/Turnover x 100%￥2003: GPP=£7,000,000/£11,674,000 x 100%=%2004: GPP=£8,037,000/£13,382,000 x 100%=%Trend: IncreaseAnalysis: The increase of ratio is a good sign. The positive trend can be an indication that stock control of meat product has improved, demand for the meat product has increased after the diseases, or purchasing policies have improved.The managers should keep the good trend and go on develop it, such as improving marketing strategy, 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 x 100%=%2004: NPP=£901,000/£13,382,000 x 100%=%%Trend: DecreaseAnalysis: The decrease of the ratio is a bad sign that it indicates a low profit of the company. From the P&L Account of the SSP plc, we know that although the gross profit increased, the operation cost is much higher in 2004; it leads toa decrease in net profit. So the managers should think about how to decrease ouroperation cost to help our company earn more profit.Liquidity Ratios:Current Ratio=Total Current Assets/Total Current Liabilities 2003: CR=£1,195,000/£767,000=2004: CR=£1,248,000/£701,000=Trend: Increase…Analysis: the increase of ratio is a good sign. Generally speaking a healthy current ratio is at least 2:1. The and indicate the company is a little bit over trading and have difficulty in meeting its short-term debts. The main reason for the increase is the increase in the total current assets and decrease in the total current liabilities. I suggest that the company may keepmore profit for the short-term debts.The Acid Test Ratio=Liquid Assets/Current Liabilities 2003: (£1,195,000-£608,000)/£767,000=2004: (£1,248,000-£796,000)/£701,000=Trend: DecreaseAnalysis: The decrease is a bad sign. The ratio should be 1:1. But the ratio in both of 2003 and 2004 is less that 1. And unfortunately, the ratio is still decreasing. SSP plc meets a liquidity problem that the liquid assets decrease.The company managers should pay attention to this ratio and organization’s development.;Efficiency Ratios:Fixed Asset Turnover=Turnover/Fixed Assets2003: £11,674,000/£4,017,000= times2004: £13,382,000/£4,318,000= timesTrend: IncreaseAnalysis: Where this ratio gas increase, this is a good sign. It indicates that the existing fixed assets are generating more sales and maybe investment in newfixed assets gas could be been paid off. Managers of SSP plc should develop and focus on it.@Debtors Collection Period=Debtors/Turnover x 365 2003: £306,000/£11,674,000 x 365= days2004: £452,000/£13,382,000 x 365= daysTrend: IncreaseAnalysis: It is a bad sign that there is an increase in DCP. It indicates that SSP’s may have 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 ratio a proper range.Investment Ratios:Interest Cover=Profit Before Interest & Tax/Interest Charges&2003: £1,416,000/£234,000=2004: £1,135,000/£234,000=Trend: 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 interest payments. But the ratio is still in a reasonable range. Leaders should try to increase company’s profit to keep this ratio a high level.Debt Ratio=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: DecreaseAnalysis: It is a good sign that the ratio increased. However, a healthy ratio should keep around 50%. It indicates that SSP has fewer liabilities or keeps more assets. The sign should be kept by managers.3.RecommendationAfter reading and analyzing three accounts from SSP Company, I found some problems with it and now I will present my suggestions about the future management in these two parts.Operational recommendationA ratio of Net Profit Percentage shows us that SSP plc has a high expenditure inoperation 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 management system and using contractors to find distribution channels but to find them itself.Financial recommendationFor the source of finance, SSP has a bad performance of financial operating. In the Cash Flow Statement, the Financing is £0, but the company is planning expansion in Glasgow. The main inflow of the company is the sales. It is a dangerous phenomenon if the company wants to use the turnover to expanse its business because it is impossible to use the current cash to support long-term investment. So I suggest that the company may increase the number of share capital or make more debentures to get more long-term capital for expansion.ConclusionBy analyzing the P&L Account, Balance Sheet and Cash Flow Statement, we can infer that SSP plc has a good operational performance. However, there are still many parts to improve and develop to help the company maximize profits.ReferenceRay H. Garrison, Managerial Accounting, Business Publications Inc., 1985, Printed in Accounting for Non-accounting Students, Financial Times, 2004, Printed in Great Britain.Frank Wood & Alan Sangster, Business Accounting 2, Financial Times, Pitman Publishing, 1999, Printed in China.。

Index pageIndex page………………………………………..…. Introduction…………………………………………. Background………………………………………..…FindingsSection 1………………………………………… Section 2………………………………………… Section 3…………………………………………Conclusion………………………………………….. Reference…………………………………………….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 products. 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 that 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 chief executive’s memo of 30 December, here is my report summarising and analysising the financial position 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 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 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 get the statements.Section 2. Source of financesTo run a business, organizations require 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 from 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 period 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-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 suppliers and the customers may forfeit discounts.The credit is £544,000 in 2003 and it decreased to £405,000 in 2004. The percentage of decrease is 25.56%. 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 the 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 flexible and cheap. It has a low cost. Some small bank overdraft even has a freeof 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.Long-term sources:1.Debentures:Debentures are loans make to companies that carry a fixed rate of interest. The company’s fixed assets normally secure debentures. Debentures have a fixed time period or an open time period. The shareholders are not debenture holders. A 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 the company’s fixed assets are steady.2.Ordinary shares:Ordinary shareholders receiving pay-outs from company after preference shareholders are paid. Ordinary share dividends are not fixed and subject to company’s periodical performances and decisions of management in paying dividend. In SSP Company, the ordinary share capital is £1,950,000 in both 2003 and 2004.It infers that the company has a steady operation situation.3.Retained ProfitsThe retained profit is the finance brought from the last financial 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 16.83%. The lower ratio shows us the company had made fewer profits in 2003 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 £984,000.2.Ratio AnalysisProfitability Ratios:✧Gross Profit Percentage=Gross profit/Turnover x 100%2003: GPP=£7,000,000/£11,674,000 x 100%=59.96%2004: GPP=£8,,000/£13,382,000 x 100%=60.06%Trend: IncreaseAnalysis: The increase of ratio is a good sign. The positive trend can be an indication that stock control of meat product has improved, demand for the meat product has increased after the diseases, or purchasing policies have improved.The managers should keep the good trend and go on develop it, such as improving marketing strategy, 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 x 100%=10.13%2004: NPP=£901,000/£13,382,000 x 100%=6.73%Trend: DecreaseAnalysis: The decrease of the ratio is a bad sign that it indicates a low profit of the company. From the P&L Account of the SSP plc, we know that although the gross profit increased, the operation cost is much higher in 2004; it leads toa decrease in net profit. So the managers should think about how to decrease ouroperation cost to help our company earn more profit.Liquidity Ratios:✧Current Ratio=Total Current Assets/Total Current Liabilities2003: CR=£1,,000/£767,000=1.562004: CR=£1,248,000/£701,000=1.78Trend: IncreaseAnalysis: the increase of ratio is a good sign. Generally speaking a healthy current ratio is at least 2:1. The 1.56 and 1.78 indicate the company is a little bit over trading and have difficulty in meeting its short-term debts. The main reason for the increase is the increase in the total current assets and decreasein the total current liabilities. I suggest that the company may keepmore profit for the short-term debts.✧The Acid Test Ratio=Liquid Assets/Current Liabilities2003: (£1,,000-£608,000)/£767,000=0.772004: (£1,248,000-£796,000)/£701,000=0.64Trend: DecreaseAnalysis: The decrease is a bad sign. The ratio should be 1:1. But the ratio in both of 2003 and 2004 is less that 1. And unfortunately, the ratio is still decreasing. SSP plc meets a liquidity problem that the liquid assets decrease. The company managers should pay attention to this ratio and organization’s development.Efficiency Ratios:✧Fixed Asset Turnover=Turnover/Fixed Assets2003: £11,674,000/£4,017,000=2.91 times2004: £13,382,000/£4,318,000=3.10 timesTrend: IncreaseAnalysis: Where this ratio gas increase, this is a good sign. It indicates that the existing fixed assets are generating more sales and maybe investment in new fixed assets gas could 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 x 365=9.57 days2004: £452,000/£13,382,000 x 365=12.33 daysTrend: IncreaseAnalysis: It is a bad sign that there is an increase in DCP. It indicates that SSP’s may have 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 ratio a proper range.Investment Ratios:✧Interest Cover=Profit Before Interest & Tax/Interest Charges2003: £1,416,000/£234,000=6.052004: £1,,000/£234,000=4.85Trend: 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 interest payments. But the ratio is still in a reasonable range. Leaders should try to increase company’s profit to keep this ratio a high level.✧Debt Ratio=Total Debts/Total Assets x 100%2003: (£767,000+£1,560,000)/(£4,017,000+£1,,000) x 100%=44.65%2004: (£701,000+£1,560,000)/(£4,318,000+£1,248,000) x 100%=40.62%Trend: DecreaseAnalysis: It is a good sign that the ratio increased. However, a healthy ratio should keep around 50%. It indicates that SSP has fewer liabilities or keeps more assets. The sign should be kept by managers.3.RecommendationAfter reading and analyzing three accounts from SSP Company, I found some problems with it and now I will present my suggestions about the future management in these two parts.Operational recommendationA ratio of Net Profit Percentage shows us that SSP plc has a high expenditure inoperation 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 management system and using contractors to find distribution channels but to find them itself.Financial recommendationFor the source of finance, SSP has a bad performance of financial operating. Inthe Cash Flow Statement, the Financing is £0, but the company is planning expansion in Glasgow. The main inflow of the company is the sales. It is a dangerous phenomenon if the company wants to use the turnover to expanse its business because it is impossible to use the current cash to support long-term investment. So I suggest that the company may increase the number of share capital or make more debentures to get more long-term capital for expansion.ConclusionBy analyzing the P&L Account, Balance Sheet and Cash Flow Statement, we can infer that SSP plc has a good operational performance. However, there are still many parts to improve and develop to help the company maximize profits.Reference●Ray H. Garrison, Managerial Accounting, Business Publications Inc., 1985, Printedin U.S.A.●J.R.DYSON, Accounting for Non-accounting Students, Financial Times, 2004, Printedin Great Britain.●Frank Wood & Alan Sangster, Business Accounting 2, Financial Times, PitmanPublishing, 1999, Printed in China.。