Activity 1

 1
Why should organisations collect, file and maintain accurate financial records? Discuss in
50 to 80 words.


Why should organizations collect, record and maintain accurate financial records? To
have an idea of how the business works. Identify how the business sits financially and
inspire different processes to help in business development. It will also show where the
money goes and whether there is room for changes in staff, production and marketing.
It is mainly used to analyze the business as a whole and by sections, as well as to
determine performance


 2
What are the expectations of managers and supervisors in relation to budget or financial
plans? Discuss in 100 to 120 words.


Budgeting can serve as a planning and control system. The goals and objectives of the
company are reflected in financial terms. "Formulated" these plans are used throughout
the year and performance reports compare budget results with actual results. To
control the operation of the user can obtain reports on performance and required
corrective actions. The role that effective budgeting plays in business management is
best understood when it is related to the basic principles of management. Numerous
definitions of business management can be expressed in terms of " newest "or" planned
activity", organization, management and control must be planned first. The plan is
implemented by organizing operational and leadership operations. To manage
operations, management must establish appropriate monitoring and reporting methods
to determine how actual results relate to plans.


 3
What are the reports that can be used for financial planning in an organisation? Discuss in
30 to 50 words.


1. Variance analysis reports. - Compares the current actual profit/cost statement or
cash flow with the budgeted profit/cost figures. Unless this is done, serious shortfalls
or problems may not be identified in sufficient time to take appropriate action. They
could include clearing debtors or tightening of cash flow.


2. The general ledger. – Displays account balances at the beginning of the period, the
total debits and credits and the balance at the end of the period.


3. A capital expenditure budget. – Addresses an organization’ long-term capital
requirements, or the purchase strategy for facilities and equipment required for it to
meet its long-term objectives, which are usually set by most organisations for a
minimum period of 5 years.


4. A revenue/ expenses report. – Forecasts sales and expenses over a defined period, for
example 12 months. Most of the other budgets produced within an organisation will
draw on this budget, as it determines the number of people employed, level of raw
materials stock, rent, leases etc.


5. A budgeted balance sheet. – Displays comparative estimates for a budgeted period.
The current balance sheet at the end of a selected period is compared with that of
another similar period (usually one year). This report also includes non-cash items, such
as depreciation and estimated provision for income tax. Once the actual results are
known, a report is prepared and evaluated to identify whether significant differences
have occurred. Management evaluate the budgeted balance sheet to make sure it
reflects a sufficiently strong financial position.


6. A sales analysis report. – Displays sales revenue, cost of sales, gross profit, units sold,
average cost and percentage margin within a selected period. It compares this year’s
sales with the figures for the same period last year. This could also be produced in a
spreadsheet format. The sales budget is prepared from the sales forecast. The sales
budget provides the information required to prepare the cash receipts part of the cash
budget.


 4
What is the process for preparing budgets or other financial plans? Discuss in 80 to 100
words.


To prepare your budget and financial statements, you must
1. Identify the data to be collected.
2. Identify relevant sources of information.
3. Currency of insurance-reliability and reliability of data.
4. Classify and encode data according to accounting and organizational principles.
5. To calculate the labor costs and break-even analysis, etc., where necessary
6. Evaluate the results of the data analysis and provide regular or informal reports on
the results.
7.Detailed records of financial transactions. The budget must be reasonable-the
measures applied to the budget in terms of the amount and time of income must be
achievable. Archived data and reports from the organizations ' information system will
contribute to the development of realistic and achievable budgets and financial plans.


 5
What two forms of budgeting might be used?


Fixed budgeting:


is based on past performance, which is adjusted nominally to take into account any
changes that may occur in the future, assuming the costs and income behave the way it
was predicted.


Flexible budgeting:


is based on changing the figures depending on actual changes of conditions, which
allows to recognise differences in behaviour of fixed and variable costs in relation to
fluctuations in output. Therefore, it is more meaningful to use a flexible budget rather
than a fixed one to measure the actual expenditure.


 6
Which form of budget allows changes to be made? Discuss in 50 to 80 words.


Flexible budgeting allows changes to be made. It is based on changing the figures
depending on actual changes of conditions, which allows to recognise differences in
behaviour of fixed and variable costs in relation to fluctuations in output.


 7
Explain how contingency plans work. Discuss in 80 to 100 words.


Contingency plans are the plans prepared to address any unexpected changes to
operational plans, which rely on specific resources. Such plans allow managers to take a
variety of actions to overcome issues that might be related to resource supply,
unplanned industrial disputes, supply problems, loss of key customers, and damage to
the main equipment. These events could have a serious impact on the financial
operations of the team or organization.


Moreover, contingency plans can include considerations, such as:


• strategies for reducing costs, wastage, stack or consumables
• organizational restructuring in order to cut labour costs
• outsourcing HR and other necessary functions and tasks
• rental, hire, purchase or alternative of procurement of equipment and machinery
• backup or alternate arrangements to ensure supply of required materials and stock


 8
Why should team or work group members be actively involved in designing and
developing contingency plans? Discuss in 80 to 100 words.


Because every member of the team must clearly know and understand what to do in a
particular situation.Team members should be actively involved in emergency planning
and know what plans are: how to activate them and when to put them into operation.
"Plan contingencies for each year as part of the normal planning or budgeting process.
They can add valuable ideas to the creation of plans, and they will also be aware of the
processes if the plan is to be implemented."


Activity 2
 1
How can employees be engaged in the preparation of financial reports, allowing details
to be easily disseminated among team members? Discuss in 80 to 100 words.


Employees involved in the preparation of financial statements work with accounting as
team members. They can share account information with each other. accountants
record transactions, prepare and manage books and financial statements. The
information required for the preparation of financial statements comes from accounts.
Thus, cooperation between teams is required from professions related to Finance.
Management cooperation is also required. Management should not adopt such a rigid
and rigid policy that always comes between the work of employees in the preparation of
financial statements. Some policies they can adjust, so they don't have a lot of policies
imposed on them, so they feel bound and uncomfortable to work with. The distribution
is done in such a way that only team members share. Information should not be
transmitted through a distribution that is confidential to the company.


 2
Why should employees be involved in setting and monitoring the budget? Discuss in 30 to
50 words.


In order for employees to achieve working within a budget, they need to be made aware
of what the budget is and how their role/position in the company affects the budget.
Therefore, by involving the employees in the process of setting and monitoring the
budget, collecting data and asking for feedback, it raises their awareness to the budget
limit and helps them achieve working within it.


 3
What is responsibility accounting and what is its importance to an organisation? Discuss
in 100 to 120 words.


This is the allocation of costs to specific areas such as departments, teams, sections, etc.
It gives a proper analysis of where the main costs come from and shows how the
different areas compare. In addition to this, it can give an idea of where improvements
should be made as well As what areas of leeway there are. In addition, it helps convey
the information needed by owners and investors to evaluate financial results. In
addition, it provides up-to-date, accurate, timely information to managers for their
decision making.Helps to identify where there is an overspend of finances and optimize
costs


 4
What are cost centres? Discuss in 100 to 120 words. Give examples of cost centres that
might be encountered in an organisation.


Cost centres are the sections, departments, areas, etc that are accountable for their
own expenditure and to which costs can be allocated. There are two types of cost
centres one is production cost centres where the products are manufactured or
processed and the other one is service cost centres where a service is provided to other
cost centre. These areas include marketing, admin, manufacturing, sales, and
production. These cost centers play a very important and responsible role for any
organization.


Activity 3
 1
What is the importance of a cash flow budget or report? Discuss in 100 to 120 words.


A cash flow budget is used to determine the amount of cash available to the business to
meet expenses over a nominated period (monthly, quarterly or yearly) by taking into
account all expected cash receipts and cash expenditure over that nominated period.


For example, the main priority of a sole proprietor is to know the cash position and cash
available at any given point in time. Therefore, it is essential that the sole proprietor
prepares a cash flow budget to provide that information. Due to lack of contingencies of
micro businesses compared to larger companies, being unable to meet its financial
commitments more often than not results in bankruptcy.


 2
What data do you need to collect, and from whom, in order to construct a cash flow
budget? Discuss in 30 to 50 words.


A sales budget or sales analysis report is the critical first step for any business, small or
large, because its provides the critical information needed to produce the cash receipts
required for the cash flow budget. A sales budget calculates the sales revenue, number
of units sold, average cost, and percentage margin within a selected period. It also
compares sales of a given year to the one prior to it to determine how well the company
is doing over a certain period.


 3
Describe in 100 to 120 words how the budget is used to monitor work, performance,
variation, and team/ division outputs.


The following procedures should be followed to monitor final activities:
• Using financial records to regularly check actual income and expenditure against
budgets
• Including financial commitments in all documentation to ensure accurate monitoring
• Identify and report deviations
• Investigate appropriate options for more effective management of deviations


The main procedure to follow when monitoring final activities is to identify and report
any variances or deviations from the original budget. A deviation or variance is the
difference between the expected outcomes versus the actual outcome. It can be
favourable (when the actual outcome is better than expected) or it could be
unfavourable (when the outcome is worse than expected). It is recommended that these
comparisons are made in regular intervals throughout the budgeting period to identify
any variations in order to take actions to cope with them before they get worse.
It is recommended that each organisation sets a materiality threshold by which any
significant budget deviations will be identified and appropriate actions will be taken to
remedy the deviation (in case if it is unfavourable) by using promotions, or bulk buying
at discount to increase cost/profit ratios. Alternatively, in cases where the deviation is
favourable, capitalise on the increase to maximise revenue.


Activity 4
 1
What is the meaning of the following terms:


1. Assets.
Tangible and intangible assets owned by the company that have value (e.g. cash,
computer systems, patents)

1. Liabilities.
Money the company owes to others (e.g. mortgage, car loan)

1. Expenses.
Money a company spends on the production of goods or services it sells (e.g. stationery,
utilities, advertising)

1. Equity.
That portion of total assets wholly owned by the owners or shareholders of the company;
paid for direct.

 2
Describe in 30 to 50 words (each) what the following budgets/ reports are and how they
might be used to inform a team’s operations.


1. Variance analysis.
Variance is actually trying to measure the difference between the planned and the
actual beahviour. For example, you decide to spend $ 500 on a device, but actually
spend $ 1000. thus, analysis of variance gives you a difference of $ 500. It can also be
used to measure the difference between the expected result and the actual result. This
analysis helps the team understand the changes that are occurring, as well as plan what
to do about it.

1. The general ledger.

The general ledger – Displays account balances at the beginning of the period, the total
debits and credits and the balance at the end of the period.

1. A sales analysis report/ budget report.

Displays sales revenue, cost of sales, gross profit, units sold, average cost and
percentage margin within a selected period. It compares this year’s sales with the
figures for the same period last year. This could also be produced in a spreadsheet
format. The sales budget is prepared from the sales forecast. The sales budget provides
the information required to prepare the cash receipts part of the cash budget.

1. Variance analysis reports.

Variance analysis report - Compares the current actual profit/cost statement or cash
flow with the budgeted profit/cost figures. Unless this is done, serious shortfalls or
problems may not be identified in sufficient time to take appropriate action. They
could include clearing debtors or tightening of cash flow.

1. The revenue and expenditure report/ budget.

A revenue / expenditure report. – Forecasts sales and expenses over a defined period,
for example 12 months. Most of the other budgets produced within an organisation will
draw on this budget, as it determines the number of people employed, level of raw
materials stock, rent, leases etc.
 3
Explain (30 to 50 words) why reports must be made to:


1. Management.
2. Investors.
3. Creditors.
4. The government.
a) Management-management needs reports to evaluate the company's performance and
make decisions based on the reports received. they decide whether to adopt a plan or
rethink the decisions that need to be implemented. Based on such reports, they can
compare their results on a different scale from month to month and year to year, and
they can make decisions to improve their performance accordingly.

b) investors: - investors need reports because they have to make investment decisions.
different ratios can be calculated based on financial statements or reports that help
them compare one company to another and make decisions based on the same thing.
investors can be potential investors or existing investors who are involved in decision
making

(C)Creditors - lenders need financial statements to decide whether they can provide
loans or debts to the company. here banks, financial institutions, they rely on financial
statements provided by companies to provide loans. They basically look at whether the
company can pay off its debts with the funds available to the company.

(D) Government - the Government requires reports because they make sure that
companies know whether they are complying with regulations in preparing financial
statements and ensure that these reports are transparent and not falsified. they are
also trying to put together a report-based policy that will improve the performance of
a particular industry.

4
What details might be provided in a financial report? Discuss in 120 to 150 words.


1. The balance sheet provides information about the company's assets, liabilities and
shareholders ' equity.


The assets of the company must be equal to the sum of its liabilities and shareholders '
equity. Assets are further classified into property, plant and equipment and current
assets. Liabilities are classified into long-term and current liabilities.


2. Income statement


An income statement is a report that shows how much revenue a company has earned
over a period of time (usually a year or some part of a year). The income statement also
shows the costs and expenses associated with generating this income. It tells you how
much the company has earned or lost in that period.


Various deductions, such as depreciation, expenses, and taxes, are deducted from total
sales to see if the company has made a profit or loss. In some income statements,
interest income and interest expense are recorded separately. Some income statements
combine the two numbers. Interest income and expenses are then added to or
subtracted from operating profit to generate operating profit before income tax.


3. Cash flow statements


Cash flow statements report the company's cash inflows and outflows. This is important
because the company must have enough cash to pay its expenses and buy assets. While
an income statement can tell you whether a company made a profit, a cash flow
statement can tell you whether a company generated money.


The cash flow statement shows changes over time, rather than absolute dollar amounts
at a particular point in time. It uses and organizes information from the company's
balance sheet and income statement.


Summative assessment 1
Question 1

What is GST and how is it implemented? Who is required to register for GST? What piece
of legislation primarily governs GST?


The GST is a tax of 10% on most supplies of goods and services in Australia. From a
business point of view, in most cases it's refunded to all parties in the chain of
production other than the final consumer. Businesses will charge the GST when the
service or product is passed on to the consumer.Each business owner is responsible for
registering a GST if the turnover exceeds the threshold of $ 75,000 or can exceed it.
ATO reports that if the business was recently opened and it is expected that it will earn
$ 75,000 or more during the first year of operation, then GST should be
registered.Division 9 of the A New Tax System (Goods and Services Tax) Act 1999 (Cth)
(GST Act) stipulates that GST is applicable to a supply of goods, services and
transactions related to real property, obligations or rights.


Question 2

What are audits and why are they carried out?


An audit is an accounting procedure where financial records of a company are inspected
to verify that they are accurate. The audit keeps a company honest and reassures
employees and investors as to the financial status of the organization.


Question 3

What are:


1. Budgets.
2. Cash flows.
3. General ledgers.
 4. Profit and loss statements.
Budgets:
Are an estimation of revenue and expenses over a specified future period of time. They
are used by governments, businesses, and individuals. A budget is basically a financial
plan for a defined period, normally a year.

Cash Flows:
Cash flow is the net amount of cash and cash-equivalents being transferred into and out
of a business. At the most fundamental level, a company's ability to create value for
shareholders is determined by its ability to generate positive cash flows, or, more
specifically, maximise long-term free cash flow.

General Ledgers:
Display account balances at the beginning of the period, the total debits and credits and
the balance at the end of the period.

Profit and loss statements:

Are financial statement that summarise the revenues, costs and expenses incurred
during a specified period, usually a fiscal quarter or year. They generally recorded on a
monthly, quarterly or yearly basis.

Question 4

There are several ways organisations maintain financial records. They include manual
systems (hard copy) and computer-based (electronic) systems. How do computer and
manual systems operate?


Computer systems work by using software such as MYOB, Excel, or similar. The
advantages of computer based systems are that details can be updated regularly and
easily and also found easily without the need for excessive paperwork filing. Formulas
can be calculated instantly and there is rarely an error in doing so. It is much easier to
forecast figures and manipulate areas for business improvement. The computer based
system is ideal for larger businesses with more complex record keeping practices.
Manual based systems are good for smaller businesses with little accounting
requirements, especially ones operating without GST expenses. Records can be filed
away and updated periodically. Manual based systems can make accounting more
simplified as you don't need to be familiar with how accounting software calculates and
treats your information and it can sometimes be easier to read and understand as
everything can be organised in front of you.


Question 5

Why do organisations need accurate and timely financial information? What information
is required to manage the organisation’s finances? Who is usually responsible for an
organisation’s financial management?


It is necessary for organisations to collect, file and maintain accurate financial records
because it allows analysing and producing information for employees and for the
organisation as a whole.


Managers should have a good understanding of the planning functions and of the ways in
which monitoring and analysing performance and keeping performance records,
contributes to the work and to the ability of an organisation to exploit new
opportunities and sustain a competitive marketplace.


Resources are inputs that enable business to operate, therefore they should be
accurately planned and recorded. Financial records are necessary to monitor progress
to assure that resources are used efficiently. They contain important information from
various areas of the business on a daily, weekly or monthly business. Financial
information relating to costs, operations, credit analysis, inventory management and
invoices allow management to monitor and control cash flow, production and
productivity, solve problems, plan for continuous improvement, implement quality
control procedures and to plan future strategies. Moreover, it gives an opportunity to
see if there is a need to change work practices or revise the budget.


Secondly, collecting, filing and maintaining accurate resource allocation records
enables monitoring of company’s operations and are used to develop the next operating
period’s budgets for the organization. They make it possible to track where and how
the resources are used, what is their cost, who uses them, how effective the
distribution systems are, and where and how waste occurs. This enables managers to
assess the resources needed in future and what are possible methods of minimising
waste. Regular collecting, filing and maintaining accurate financial/resource allocation
records can also provide an early warning of performance problems.
Taking into account all mentioned above, it is essential that each organisation has in
place secure, user-friendly systems to collect, collate, file, store and maintain financial
and resource allocation records. They would be used to determine what can and should
be done now as well as in the future.


Summative assessment 2
Project 1

Conduct research or use an organisation that you know of, get a copy of an Annual
Report.


Answer the following questions:


1. To whom is this report disseminated and how is this done?
2. Why do these people need the information contained in the Annual Report?
3. What financial information does the report offer? Describe the contents of the report and explain what it tells
you about the business’ activities—successes and non-successes—during the year.
4. Examine the financial summaries for information about the fiscal condition of the company. Did the company
show a profit?
5. What sorts of recommendations are made and what suggestions are made regarding business activities for the
upcoming year?
If possible, find a copy of the Annual Report from the previous year.

1. Compare the two and report on whether the projections from the first report were accurate.
2. Were the recommended changes/ improvements made and how did they impact on the next year’s report?
Discuss the annual report in 3 to 5 pages.

Part 1) Answer :

To whom is this report disseminated and how is this done?

An yearly report regularly contains an outline of execution and prospects by the chief
official, money related information, comes about of a company’s operations, data on
advertise conditions, new product plans, and research and development activities.

An annual report is an important element of a financial communication strategy to

attract and retain investors. Regular communication updating investors on financial
performance and company developments helps engage investors in the business and
build more beneficial relationships. Investors look for evidence of sound management
when they review the financial data in the report. They can see whether sales are
leveling off or the company has taken on too much debt. To protect their investment,
they also want to know that a company is operating in a market that offers growth
opportunities, according to Entrepreneur. The sections on market conditions, product
plans, and research and development provide an indication of a company’s prospects

Below are the individuals to whom yearly report is being sent.

1. Proprietors and financial specialists: Stockholders of organizations require budgetary

data to assist them make choices on what to do with their speculations (offers of stock),
i.e. hold, offer, or purchase more. Imminent speculators require data to evaluate the
company's potential for success and benefit. Within the same way, little commerce
proprietors require money related data to decide on the off chance that the commerce
is productive and whether to proceed, make strides or drop it.

2. Administration: In little businesses, administration may incorporate the proprietors.

In huge organizations, be that as it may, administration is more often than not made up
of contracted experts who are endowed with the obligation of working the trade or a
portion of the commerce. They act as operators of the proprietors.

Administration, whether owners or hired, regularly face economic decisions – How much
supplies will we purchase? Do we have enough cash? How much did we make last year?
Did we meet our targets? All those, and many other questions and business decisions,
require analysis of accounting information.

3. Banks: Loan specialists of stores such as banks and other monetary teach are curious
about the company’s capacity to pay liabilities upon development (solvency).

4. Trade creditors or providers: Like moneylenders, exchange banks or providers are

inquisitive about the company’s capacity to pay commitments when they become due.
They are in any case particularly curious about the company's liquidity – its capacity to
pay short-term commitments.

5. Government: Overseeing bodies of the state, particularly the assess specialists, are
interested by an entity's monetary data for tax collection and administrative purposes.
Charges are computed based on the comes about of operations and other charge bases.
In common, the state would like to know how much the citizen makes to decide the
assess due thereon.

6. Employees: Employees are curious about the company’s productivity and solidness.
They are after the capacity of the company to pay pay rates and give employee benefits.
They may moreover be fascinated by its monetary position and execution to evaluate
company development conceivable outcomes and career advancement openings.

7. Customers: When there's a long-term association or contract between the company

and its clients, the customers gotten to be inquisitive about the company’s capacity to
proceed its existence and keep up soundness of operations. This require is additionally
increased in cases where the clients depend upon the substance. For illustration, a
merchant (affiliate), the client in this case, is subordinate upon the fabricating
company from which it buys the things it resells.

8. General Public: Anyone outside the company such as researchers, students, analysts
and others are interested in the Annual Report of a company for some valid reason.

An annual Report Can be made available to these people through various means some of
which are given below:

1) Physical Copy Distribution.

2) Advertised through Print media like news papers and Financial Magazines.

3) Making the Copy Available on Digital media like Companies own website and other
financial portals.

4) Copy on demand for external stack holders.

apart from that there are many other ways to dissiminate the annual report with in in
and out side the organisation but practicaly speaking the Companies web site is the
most easy and efficient way of distributing the Annual Report to the stakeholders.

Part 2) Answer:
The annual report remains a capable device to communicate a company’s qualities and
methodologies to key partners, indeed in today’s world of moment data. Much more
than fair a depiction of a company’s execution for the past year, the yearly report is an
opportunity to highlight a company’s key accomplishments, desires for the coming year
and in general objectives and goals, all in a organize that's effortlessly available by a
wide run of groups of onlookers. Through a combination of compelling visuals and
persuasive content, the yearly report can tell a company’s full story, from its items and
development prospects to the abilities of its individuals and commitment to
maintainability

The partners ought to carefully analyze an yearly report to discover out the following:

They need to know how well the company is doing. Are profit higher, lower, or the same
as the year some time recently? How are sales doing? These numbers ought to be
displayed clearly within the budgetary segment of the yearly report.

They need to discover out whether the company is making more cash than it is investing.
How does the adjust sheet see? Are resources higher or lower than the year some time
recently? Is obligation developing, contracting, or approximately the same as the year
some time recently?

They need to induce an thought of management’s vital arrange for the coming year.
How will administration construct on the company’s victory? This plan is ordinarily
secured within the starting of the yearly report — regularly within the letter from the
chairman of the board.

The partners got to figuring out where the company has been, where it is presently, and
where it’s going. As an financial specialist, you don’t have to be studied the yearly
report like a novel — from cover to cover. Instead, approach it like a daily paper and
bounce around to the important segments to induce the answers you wish to choose
whether you ought to purchase or hold on to the stock.

Shareholders require budgetary explanations to assess their value ventures and offer
assistance them make educated choices as to how to vote on corporate things. When
assessing speculations, shareholders are able to gather important information found on
money related articulations. There are a number of tools shareholders can utilize to
create value assessments, and it is vital for them to analyze their stocks employing a
assortment of estimations. Accessible assessment measurements incorporate benefit
proportions, liquidity proportions, obligation proportions, productivity proportions and
cost proportions.

What budgetary data does the report offer?

Part 3) Answer :

The yearly report may be a comprehensive report given by most open companies to
reveal their corporate exercises over the past year. The report is typically issued to
shareholders and other partners who utilize it to assess the firm's money related
execution. Ordinarily, an yearly report will contain the taking after segments:

General Corporate Information

Operating and Financial Highlights
Letter to the Shareholders from the CEO
Narrative Text, Graphics, and Photos
Management's Discussion and Analysis (MD&A)
Financial Statements, including the Balance Sheet, Income Statement, and Cash Flow
Statement
Notes to the Financial Statements
Auditor's Report
Summary of Financial Data
Accounting Policies
etc.

Reporting companies must send annual reports to their shareholders when they hold
annual meetings to elect directors. Under the proxy rules, reporting companies are
required to post their proxy materials, including their annual reports, on their company
websites.

The following points highlight the major contents of an annual report in detail :

Chairman’s Speech:

Chairman’s speech highlights corporate activities, strategies, researches, labor

relations, main achievements, focuses on future goals, growth. In corporate annual
report, the chairman’s speech may not always be found but may be provided to
shareholders as a separate document. Chairman’s speech may concentrate on economic
condition of the industry to which the corporate unit belongs and the economy of the
country.

Director’s Report:

In the report chiefs are to display their report with regard to the state of company’s
issues, the sum in the event that any which they purposes to gain, to any save and profit,
materials changes and commitments in case any, preservation of vitality ; innovation
assimilation and remote trade profit. The board’s report is for the most part marked by
the chairman on the off chance that authorized, something else it is marked by the
company’s director or secretary in case any, by not less than two chiefs of the company,
one of whom should be overseeing chief.

Auditor’s Report:

An reviewer is designated by the shareholders of a company to review accounts and as

such, reviewer addresses the report to the shareholders of the company on the accounts
inspected by him. It is the obligation of the board of executives to join the auditor’s
report to the adjust sheet so as to supply a duplicate of auditor’s report to each part of
company.

Balance Sheet:

Budgetary position as well as condition. This explanation shows anything company has
and anything company owes. The abundance of resources over liabilities is known as
proprietors equity/shareholders stores.

Profit and Loss Account:

The profit and loss account which is also known as Income Statement indicates net
profits earned by company during current financial year.Salary articulation moreover
shows benefits accessible for dispersion and allotment after assembly charge liabilities.
Benefit and Misfortune Allotment Account or Held Profit Account is additionally
submitted with benefit and misfortune account which shows apportionment made amid
the period.

Schedules:

An average annual report generally contains some schedules forming part of balance
sheet and others forming part of profit and loss account. These schedules are attached
with financial statements for giving detailed information regarding items concerned.

Accounting Policies:

Accounting approaches speak to choices among distinctive bookkeeping strategies that

can be utilized whereas planning of money related articulations. Each announcing
substance utilize to reveal different bookkeeping arrangements taken after whereas
displaying different things of salary articulation as well as of adjust sheet for
occurrence strategy taken after for charging devaluation on Settled Resources.

Project 2

Explain in 500 to 900 words the following statement:


‘Ratio analysis can help in measuring business performance and setting objectives/
goals.’


Ratio analysis is an efficient method of evaluating the insight into a company's finance,
liquidity, profitability, operational efficiency by comparing information contained in
its financial resource current and past. Ratio analysis is very important for
organisation.


The main purpose and importance of ratio analysis are to evaluate or analyse the
financial performance of the organisations in terms of risk, efficiency and profitability.


One of the main aim of the business is to be profitable and it is crucially vital to keep
checking if financial situation of the company is healthy. If current situation in
organisation is profitable then future objectives can be set relying on the current data
that has been analysed.


Also interpretation of the financial data is essential for all internal and external
stakeholders of the organisation. With the help of ratio analysis it can be interpreted
the numbers from the balance sheet and income statements. Every stakeholder has
different interests when it comes to the result from the financial like the equity
investors are more interested in the growth of the dividend payments and the earnings
power of the organization in the long run. Creditors has interest as well and would like
to ensure that they get their repayments being paid.


Business performance can be measured and identified in different ratios:


1. Liquidity Ratios is one the basic one which measures organisations capability to pay
using current assets. It can be further classified into current ratio, capital working
ration and quick ratio.


2. Profitability. Profitability ratio defined by measuring organisations profit by main
operations.


3. Efficiency. Efficiency ratio is about measuring organisations ability to use current
assets and liabilities to increase the returns.


4. Solvency. Solvency ratios helps to compare organisation on on debts and equity to
evaluate its ability to pay.


Those ration can also be used to compare performance of an organisation with it's
competitors. It done correctly it is a great tool to measure and maintain success.

Profitability ratios help us meansure an organization's profit generating ability through

its core operations. Profitability ratios act as a great tool to understand and analyze
the profit margin an organization currently holds and make changes to the margin
according to the organization goals using Gross Margin and Net Margin ratios. Also these
ratios help us understand the firm's ability to earn returns from its Assets from Return
on Assets Ratio, Return of Equity Ratio, Return on Capital Employed.
 
Efficiency ratios help us measure an organization's ability to efficiently make use of its
assets and liabilities and maximize its returns / profit generating capacity. Efficiency
ratios are further classified into Asset Turnover ratio, Inventory turnover ratio and
Days' sales inventory. Asset turnover ratio will interpret the efficiency of the
organization to generate its revenue from its assets. Inventory turnover on the other
hand helps us understand the extent the stock in hand could maximize the profits an
organization can generate.


Finally the Solvency ratios help us compare a firm's debts with its equity and assets to
evaluate its ability to pay off its long term debts and its corresponding interest. Couple
of solvency ratios include Debt-Assets ratio, Debt-Equity ratio and Interest coverage
ratio.