Financial accounting and reporting

Topics: Balance sheet, Financial ratios, Generally Accepted Accounting Principles Pages: 27 (4100 words) Published: December 4, 2014


Contents
Task 11
Q: 1.11
Types of Stakeholders1
Internal Stakeholder1
External Stakeholders2
1.2)2
1.3)2
1.4) (a)3
1.4) (b)3
1.4) (c)3
Task 25
Q2.15
Q2.26
Q2.37
Q2.48
Task 38
Q 3.1)8
3.2)9
3.3)9
3.4 (a)10
Income Statement10
Statement of Division of Profit11
3.4 (b)11
Task 411
4.A11
Profitability Ratios12
Liquidity Ratios12
Solvency Ratio13
Asset Management Ratio13
Assessment of Market Value14
4. B14
Comparison of Liquidity Ratio14
Asset Management Ratio15
Profitability Ratios15
Solvency Ratio16
Decision of Selection16

Task 1
Q: 1.1
A single person or group of person who are concerned with the day to day operations and performance of a company are termed as stakeholders of that company. A list of possible stakeholders of a company may include employees, company management, company suppliers, stockholders, customers, distributers and local society. All the above discussed stakeholders look for different kind of information in the annual books of the company. The internal management of the company try their level best to boost the revenues and profitability of the organization, company suppliers generally look for the level of liquidity in the company ranks, shareholders look for dividend paying policies of the organization and its future growth plans and investors search for the debt in company’s balance sheet and its ability to pay the debt. We can reach a consensus statement that all the participants of the company have different motives and they look for their own particular type of information to fulfill their respective desires (Jackson, 2008). Stakeholders Types

Generally a company or organization has two basic types of stakeholders’ i.e. internal stakeholder and external stakeholder. Internal Stakeholder
The internal stakeholders of a company are all those individuals who have some kind of benefit attached to that company and are present inside that company for example. 1. Stockholders
2. Employees
3. Higher management team.
It can be observed that the above mentioned stakeholders of the company have different and conflicting motives. The employees of the company at time seek personal job security and career oriented goals more that the company performance, the management seek to maximize the profitability of the company and finally the shareholders look for the dividend payout and their wealth maximization (Heath, 2004). External Stakeholders

The type of company stakeholders who are not directly part of that company but they have their stake involved in the operations and performance of the company. Following is the possible list of the external stakeholders of a company. 1. Distributors

2. Company Suppliers
3. debtors
4. Surrounding Community
5. Government
6. Credit Unions
7. Environment
The government of the area or region in which company is operating wants the company to run its operations in a fair way according to the laws of corporate social responsibility and it also demands return from the company in the form of taxes. Creditors look for the financial outcomes of the firm to see the soundness of firm. They want the company to pay them timely and with full amount. Customers want quality goods and fair prices charged for those products. Vendors look for a long term relationship with the company as they are interested in making continuous sales to a particular part. Community living around the areas in which the company is serving has interest in the job creation and fair operations by the company (Epstein, 2010).

1.2)
The financial reports of the company are extremely important in the sense that they tell all the stakeholders about the financial soundness of the company. The role of a regulatory authority becomes very important in this regard as it is responsible for keeping check and balance on the credibility of the information provided by a company in its financial statements. The...

References: Epstein, M. (2010). Advances in Management Accounting. Emerald Group Publishing.
gross profit margin ratio. (n.d.). Retrieved May 02, 2014, from investopedia: http://www.investopedia.com/terms/g/gross_profit_margin.asp
Heath, J
IFRS and US GAAP: similarities and differences. (n.d.). Retrieved April 12, 2014, from PW: http://www.pwc.com/us/en/issues/ifrs-reporting/publications/ifrs-and-us-gaap-similarities-and-differences.jhtml
Jackson, S
LIQUIDITY RATIOS. (n.d.). Retrieved April 12, 2014, from .midcapcpas: http://www.midcapcpas.com/liquidity_ratio.htm
Peavler, R
Post, J. E. (2002). Redefining the Corporation: Stakeholder Management and Organizational Wealth. Stanford University Press.
Stickney, C. (2009). Financial Accounting: An Introduction to Concepts, Methods and Uses. Cengage Learning.
UK regulatory bodies. (n.d.). Retrieved May 2, 2014, from icaew: http://www.icaew.com/en/library/subject-gateways/accounting-standards/knowledge-guide-to-uk-accounting-standards
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