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1. An investigation into the Accounting and Financing of Courts Jamaica Limited.Name : Alex EllisSchool :
Oberlin HighTerritory : JamaicaRegistration # : 100086Teacher : Ms ColemanCentre # : 100086Date :
April 2011 1

2. Content PageAcknowledgement 3Aims 4Introduction and Objectives 5Methodology Employed

6Report 7 - 12Conclusions and Recommendations 13Bibliography 14Appendices 15 - 20 2

3. This project is the fruit of concerted efforts. A project of this magnitude was effectively compiled
withthe assistance and contribution of a number of individuals; gratitude must be extended to such
persons. The researcher would like to thank God almighty for giving him the health and strength he
need tocomplete this Management of Business Internal Assessment, so as to meet the requirements of
the CaribbeanAdvanced Proficiency Examination syllabus. The researcher would like to give credit to his
teacher Miss Coleman for the role she played inoutlining the task I am expected to perform. I would like
to express my warmest thanks to my friends at school who contributed significantly to myproject.
Finally, I would like to say thanks to the staff at the school’s computer labs that went beyond the callof
duty to ensure that the necessary resources were available and the attention was forth coming so that
myproject was completed efficiently. 3

4. The aim of this research is to concentrate on the systematization of Courts Jamaica Limited. The
focusis on the Business Accounting and Finances- Module 3. The objectives of the business are to
provideaffordable furniture and appliances to the Jamaican people, create values for their stockholders
by providingquality goods and services, make huge amounts of profit and sell large amounts of shares.
This research wasdone in the context grasping the business aspects of the business environment,
including theoreticalknowledge of these aspects from a practical standpoint of owning business. Also,
this research gives me achance to start my examinations with twenty percent (20%) of the available
marks. 4

5. This project is designed to thoroughly research a legal form of business. The project involved
therelevant information that will give students the general understanding of how such a firm operates.
Thecontents of the research seeks to give a comprehensive round up of all the areas of the business,
however,specific attention was focused in three broad areas in the operation field. This project covers
the areas that areincluded in the unit one Caribbean Advanced Proficiency Examination (CAPE) syllabus
for Management ofBusiness. This project will look specifically on Module three of the syllabus which
deals with the companyAccounting and Financing. The areas which will be covered are: The business
source of finance Criteria for seeking finance Use of accounting information Accounting procedures
and measures Financial statement and analysis Major concepts This project also contains a chapter
that looks at the business published accounts. The informationplaced in this section was those obtain
from the secondary source of data collection 5

6. In order to accurately obtain the relevant information needed to complete this project both primary
andsecondary methods of data collection were used. The primary mean of collecting data involved the
use ofquestionnaire. The questionnaire consisted of twenty questions, of open and closed ended
questions. Thequestionnaire was very simple to use and answered all the questions the researcher
needed to effectivelycompile his project, hence, the method effective and widespread. A total of three
questionnaires were issuedusing a random sampling approach. Secondary means of data collection
involved the use of textbooks, newspapers and magazines. Thismethod of data collection also played an
important role in the effective compilation of my project. Thetextbook used in the data collection
process, contained the general information that corresponded with theCAPE syllabus, these information
provided a linkage between what is being thought and what it is actuallylike in the business place. The
information that the newspapers and magazines contained was vital in effectivecompletion of the
research. The published accounts of the firm were found in these means of data collection.These two
sources used in the data collection process were sufficient to complete my research. The researcher
during the research faced few problems such as: limited amount to have athorough research on the
topic, due to the fact the researcher time had to be balanced out with other internalassessments.
Another problem faced by the researcher was that he did not have enough equipment to get
theassessment done on time. 6

7. 7

8. The Courts Jamaica Limited as the name suggested is a public limited company, that is to say that
thebusiness is privately owned by shareholders and its shares are listed on the Jamaica Stock Exchange
and theseshares are freely transferable of the company are published on a yearly basis in the form of
annual reports andare open to public scrutiny. This means that the business has little privacy in its
operation. It is domiciled inJamaica and also a subsidiary of Courts Furnishers (Overseas) Limited which
is incorporated in England andwhich is seventy nine point nine percent (79.9%) of the company’s issued
stock units. An economic system is the framework design to allocate the scarce resources of a country.
Theresources of Jamaica are allocated through a mixed economic system; in this system there is some
private andsome public ownership of its economic resources. In this type of economic system, Courts
Jamaica Limited isforced to produce a wide range of quality furniture and appliances at an affordable
price to the Jamaicanconsumers, in order to effectively compete on the local market. In this type of
economy the company alsoforces restrictions and laws, which may affect its operation. Courts Jamaica
Limited and all other businesses are faced with the problem of financing businessactivities. The
company has the need to finance its working capital and it’s the day to day finance, needed topay bills
and expenses and to build up stocks. Businesses also need to finance investments such as
specialprojects and expansions. Courts Jamaica Limited finance the needed to increase the firm’s capital
assets whenthe company undertakes expansion, the company on occasion pay for research and
development of newproducts. In general companies have a variety of sources which it can finance from;
these sources are normallyinternal or external sources. The internal sources of finance include retained
profit (is profit after tax that hasnot been returned to owners), working capital and sale of asset.
External sources include share capital, loancapital such as mortgage; and debentures also bank
overdraft and trade credit. The diagram below shows thecompany sources of finances. 8

WORKING CAPITAL LOAN CAPITAL Courts finances its businesses activities through stockholders equity
and profits retained. As a limited company Courts issues shares, the capital raised from this venture is
used to finance business activities. If a company is trading profitability some of these profits will be
taken in by the government as corporate tax and some is nearly always paid out to shareholders this is
known as dividends. If any profits remain; this retained in the business and become a source of finance
for future activities this is known as capital reserve, which can also be used to redeem shares. The profit
retained by Courts is its first source of finance. Accounting act as system, which process business data so
that stakeholders can be provided with means understanding how well an organization is performing. As
it’s with Courts accounting information is particular important to the company financial decision
makings. The company makes choices that are in its best financial interest. In recording accounting
information Courts use Profit and Loss account Statement of Cash flows and Statement of changes in
stockholders’ equity. When Courts Jamaica Limited is about to seek finance it has certain criteria for
selecting the source of financing these include; cost, use of funds and its financial situation. The cost
criterion deals with choosing sources which are less expensive both in terms of interest and interest
payments administrative costs. When undertaking heavy capital expenditure the company normal funds
this by the use of long term sources which is normally an external source. 9

10. The company’s accounting information is used by various groups and the company financial
statementshave to be published. The users of the company financial statements include owners,
employees, tax authority,competitors, management and government. The need for the company
financial information by the differentgroups are different where employees use it when discussing wage
bargains, managers when recording,analyzing and controlling the company operations, owners for
assessing performance, tax authorities to showproof of income, competitors for analyzing the company
stability and performance, and the government forstatistics on companies. The company when
recording its financial information it has several accounting concepts which it has tofollow in order for
the business to reflect a true and fair view of its financial position. These concepts are theaccruals
concept, consistency concept, separate entity, money terms and historical cost. The accruals
conceptthat costs and revenues should be matched with the period in which they occur. The consistency
concept statesthat when one decision has been made about the treatment of a transaction it should not
be change. A businessis a legal person in its own right and has a separate identity from that of the
owners is what is outlined by theseparate entity concept. Money terms indicates that when business
transactions are being recorded it should berecorded in a monetary value while historical cost stipulates
that all assets are valued according to theiroriginal cost rather than what they currently worth. Financial
statements are formal records of the financial activities of a business. A limited company set offinancial
statements includes a balance sheet (a summary at a point in time of business assets, liabilities
andcapital), income statement (shows the a business income after expenses and tax from operating
profit), cashflow statement (shows a company sources and uses of cash in a trading period) and notes
which explained thefigures in the other financial statements. The financial statements of the company
are structured in a particular manner and must certain keyelements which they must consist. Each
financial statement has its own purpose as stated above where a briefdescription of their purpose
where given. 10

11. The balance of the company should contain the following: the company assets, its liabilities and
thecompany equities. The balance sheet should have the company name on it the date for which it had
beenprepared for and the currency which it being expressed in. The assets should be listed first then
followed bythe liabilities then equities. The income and cash flow statement should enlist the revenues,
the gains, expenses, profits or losses andthe comprehensive income. They should also give the company
name, the date for which it is prepared for andthe currency which it is expressed in. Ratio analysis is
done by comparing and assessing a company performance by means of accounting data.The net profit
margin as a profitability ratio assesses how successful the management of a business has been atearning
profits for the business. The ratio compares the business net profits for the business. The ratiocompares
the business net profits for the business net profit with its sales. Gross Profit Margin (%) = Gross Profit x
2,552,273 x 100 = 55.6% ` Sales Turnover 4,591,907 Courts Jamaica Limited gross margin is high; this
gross profit is only fifty five point six percent (55.6%)of its sales turnover. This is indicated by figure 2 in
the appendices, where it explains that sales is sixty fourpercent (64%) and gross profit is thirty six
percent (36%) given a ratio of 1.8:1, therefore for every one dollareighty cents ($1.80) of sales one dollar
($1.00) goes to gross profit. This is a good sign since it will yield agood net profit margin as indicated by
figure 3 where the sales is eighty four percent (84%) and net profit issixteen percent (16%), showing that
there is a ratio of 5.1:1, therefore the company the company makes onedollar profit from every five
dollar ten cents. The profitability ratio compares the profit of the business withsales, assets and capital
employed. The gross profit margin is a good indicator of how effectively managershave added value to
the cost of goods sold. Current Ratio (%) = Current Assets x 4,043,643 x 100 = 600.95% ` Current
Liabilities 672,873 11

12. Liquidity ratio assesses a business ability to pay its short-term debts. Current ratio, as a current
ratiocompared to current assets with current liabilities. Current ratio of Courts is 6:1 and the company
high currentratio suggests that the company is able to pay off its creditors six times. This is show in
figure 1 in theappendices where it indicates that of the total current assets and current liabilities,
current assets total eightyfour percent (86%) while current liabilities total fourteen percent (14%). This is
a good ratio because abusiness current asset should be at least two times its current liabilities and the
company ratio is 6:1. 12

13. Courts Jamaica Limited is a public listed company incorporated and resides in Jamaica. It is
asubsidiary of Courts Furnishers (Overseas) Limited which is incorporated in England and which holds
79.9%of the company’s issued stock units. The ultimate holding company is Courts PLC, which is also
incorporatedin England. The principal activities of Courts Jamaica Limited consist of the retailing and the
hire purchasefinancing of furniture and appliances. When Courts started its operations, furniture was
being imported;however this has changed. The change being referred to is a switch in 1965 to all locally
manufacturedfurniture in the company’s effort to assist in the development of the domestic furniture
manufacturingindustry. It could be concluded that Courts Jamaica Limited has various sources of finance
and has criteria forchoosing the source of funds. It could also be concluded that the company follow
some of the majoraccounting concepts and a lot of different groups of people uses the company
accounting information forvarious reasons. The researcher would like to recommend that the company
continue to using the accounting conceptsit’s using now and adopt other principles was well as
conventions. The recommends that Courts JamaicaLimited increase on the availability of internal
sources of fund so has to reduce the cost associated withborrowing. 13

Hall, D., Jones, R., Raffo, C., Chambers, I.,14. & Gray, D. (2004). Business Studies. London: Pearson
Wood, F.,Education. & Sangster, A. (2008). Business Accounting 2. London: Prentice Hall. 14

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16. Questionnaire1. What form of business does the company operate? ( ) Sole Trader ( ) Partnership ( )
Limited Company ( ) Corporation ( ) Cooperatives2. What is the objective of your business?
_____________________________________________________3. What line of business is the firm
engaged in? ______________________________________4. Which management style is employed? ( )
Directive ( ) Paternalistic ( ) Constitutional ( ) Participative5. Is this management style effective? ( ) Yes ( )
No b). Explain your response.
________________________________________________________________6. What is the span of
control like in the organization?
__________________________________________________________________________7. How is
information communicated within the company? ( ) Vertical ( ) Horizontal8. Are job descriptions issued
to prospective employees? ( ) Yes ( ) No B) What do they include?
________________________________________________________________ 16

17. 9. What are the factors of production employed by the business?

________________________________________________________________10. State the scale of
production – e.g. 50 sales per day, 1000 products made each week?
__________________________________________________________________________11. Is the
business labour or capital intensive? _______________________________________12. Are there
normally any production/sales problems that this enterprise encounters? ( ) Yes ( ) No B). If so what are
________________________________________________________________13. What are the business
sources of capital? ( ) Loans ( ) Shares ( ) Retained Profit ( ) Dividend ( ) Other If other state
___________________________________________________________________14. What kind of
collateral is used by the business to secure loans and what are the terms of repayment?
________________________________________________________________15. How profitable is the
business and what contributes to this?
________________________________________________________________16. Does the business
provide employment to citizens? ( ) Yes ( ) No17. Do the working conditions for employees meet the
legal guidelines? Explain.
________________________________________________________________ 17

18. 18. Explain the safety procedures followed, if any:

________________________________________________________________19. Are the products of
the business exported? ( ) Yes ( ) No20. How does the business help in the development of the country?
________________________________________________________________ 18