Business calculations
Assignment task
SKANSA PLC is a Construction Company based in UK. SKANSA PLC started back in 1984. The company is planning to expand its operations to other countries in Europe in the next ten (10) years.
The summarised financial statements of SKANSA PLC, a Public company engaged in Construction, are shown below.
Statement of profit and loss:
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For the year ended 31 Dec. 2020
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For the year ended 31 Dec. 2021
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|
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£000
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£000
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£000
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£000
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Sales revenue
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4,800
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6,000
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Cost of sales
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|
|
|
|
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Opening inventory
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1,200
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450
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|
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Purchases
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2,700
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4,800
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|
|
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3,900
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5,250
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Less: Closing inventory
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(450)
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(3,450)
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(900)
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(4,350)
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Gross profit
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1,350
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1,650
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Operating expenses
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(600)
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(675)
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Finance cost
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(150)
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(300)
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Net profit
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600
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675
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Statement of financial position
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As at year to 31 Dec. 2020
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As at year to 31 Dec. 2021
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|
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£000
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£000
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£000
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£000
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Non-current assets
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2,955
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6,000
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Current assets
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|
|
|
|
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Inventory
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450
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|
750
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|
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Receivables - trade
|
900
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|
1200
|
|
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Prepayments
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90
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|
105
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|
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Cash
|
75
|
1,515
|
15
|
2,070
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|
|
|
4,470
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|
8,070
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Issued share capital
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900
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|
900
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Share premium account
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|
300
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|
300
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Retained earnings
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1,125
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|
1,650
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|
|
|
2,325
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|
2,850
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|
Non-current liabilities
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|
|
|
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10% loan notes
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1,500
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3,000
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Current liabilities
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|
|
|
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Payables - trade
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570
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|
2,100
|
|
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Accruals
|
75
|
645
|
120
|
2,220
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|
|
|
4,470
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|
8,070
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An individual written assignment of 2,500 words maximum is expected. Use the formal report format and include a Bibliography/ reference list of all books, journals and websites consulted in your research. Assume that the financial analysis is aimed at potential investors who are currently considering investing in SKANSA Plc. The financial performance evaluation will enable the potential investors decide whether to invest in this company.
You are advised to incorporate the suggested amendments/feedback you received from the module leader during assignment briefing.
TASK 1
You are part of the Accounting and Finance team at SKANSA PLC.
Write a report to the Management of SKANSA PLC, critically evaluating the importance of Accounting and Finance functions, duties and roles within SKANSA PLC. Your evaluation must include some examples within the Company where appropriate.
TASK 2
a. Using the financial statements ofSKANSAPLC, calculate the following five ratiosfor each of the two years:
1. Return on capital employed
2. Net profit margin
3. Current ratio
4. Average Receivable days/ Debtors collection period
5. Average Payable days/ Creditors collection period
b. Comment on the company's performance from an Investor with £1 million perspective.
The interpretation and analysis of the Ratios in relation to SKANSA PLC's performance is required here. Results from and position between the two (2) years should be revised, explained and analysed, mentioning possible causes, reasons and effects for the changes in the ratios.
This assignment has been designed to provide you with an opportunity to demonstrate your achievement of the following module learning outcomes:
Learning outcome 1: Demonstrate knowledge of the role of finance and accounting within the organisation with respect to both reporting and decision-making aspects.
Learning outcome 2: Explain the structure and terms used within the main financial statements
Learning outcome 3: Apply management accounting techniques for planning, control and decision-making within the organisation
Learning outcome 4: Calculate the main accounting ratios and explain their significance
Referencing and presentational requirements
Please reference your work using the Harvard style as defined in Cite Them Right Online. This information is also available in book form: Pears, R. and Shields, G. (2019) Cite them right: the essential reference guide. 11th ed. Basingstoke: Palgrave Macmillan. Copies are available via the University library.
- Depth of knowledge and understanding of the role of management accounting techniques in planning, control and decision making process
- Background investigation, analysis, research, enquiry and/or study
This should include evidence of:
• Correct Interpretation and analysis of financial ratios
• Logic and argument
• Use and range of independently selected sources (Mintel/Passport)
• Analysis and synthesis
• Analytical reflection
• Organisation and communication of ideas and evidence
Attachment:- Financial Decision Making.rar