SSP plc is engaged in food processing, supplying all the main supermarket chains with first class processed meat products. The last few years have been difficult for the food manufacturing industry because of food scares surrounding BSE and Foot and Mouth disease, both of which have led to an increase meat production around the world. As a responsible company, SSP have taken steps to ensure the health and safety of all there meats in the production chain. This report will analyze the financial information users, sources of finance and SSP’s ratio analysis, which shows cash flow of SSP over the accounting period and gives and overall analysis after those ratios.
There are six kinds of users of financial information in SSC plc. Managements are people employed by the company to administer and control the use of the resources. They use financial information to make effective decisions, to compare performance with previous years and competitor, and identify areas of improvement, plan future resource allocation, decide purchasing and pricing policies. They will use the financial accounts and ratio analysis, budgets are also an important source to management to identity possible future problems.
Employees are people hired by the company. They are interested in profitability and the company’s future prospects that will effect their job security and future salary negotiations. They will use the cash flow statement that as a guide to future prospects, also trading, profit and loss account and profitability ratios can be used by them.
Present shareholders are the owners of limited companies who have invested in a business by buying ordinary or preference shares. They cared about the value of their share and the return on the investment, to help them decide whether to remain in this company or invest elsewhere. They will use profitability ratios which related dividend they can receive. Also, they will receive a copy of the annual report.
Short-term creditors are individuals or organizations that lend the company money or goods. They will analysis the liquidity and long-term future of business to decide the level of financial to be given, and evaluate the level of risks. They will use cash flow statement and the liquidity ratios. In addition, the creditors collection period will be useful.
Competitors are another company in the same industry or who operate in the same location. They will be interested in all areas of the business such as stability and pricing policy that may allow them to be leader in the market, and compare the performance with others. They will use all sources of information in particularly compare ratio calculations.
Analysts are individuals, organizations or government departments who compare the performance of companies. They will use this information to prepare reports, advise clients or sell their analysis to any interested party. They will use all sources of information.
From the balance sheet of SSP plc, there are the following sources of finance. Source of finance are categorized according to the period over which the capital can be used: the short-term, medium-term and long-term. The short-term refers to funds that can be used for a period of no more than one year. In SSP plc, bank overdraft, tax and trade creditors included. Long-term capital is the capital can be used longer then one year. In SSP plc, debentures, share capital and retained profit are included. According to the different sources of capital are divided into two categories: equity capital and loan capital. Equity capital is the finance provided by the owner. The advantage is there is no interest to pay. The company generates equity capital internally. Other than share capital provided by shareholders, equity capital includes profits generated each year by the company. Loan capital refers to capital that has been sourced externally, it should be repaid with interest when it’s due to return,...