Develop critical analysis in the communication and interpretation of financial information for a range of stakeholders.Develop critical analysis in the communication and interpretation of financial information for a range of stakeholders.
Task Details/Description:
You are required to complete an assignment covering both financial accounting and management accounting techniques applied to a case study company, Mettricks ltd. Within the case study there are four separate requirements as follows:
Learning Outcome 1: Application of management accounting tools and techniques to aid costing, performance management and business decision making
Learning Outcome 2: Develop critical analysis in the communication and interpretation of financial information for a range of stakeholders.
Presentation Requirements:
Format: An appropriate, professional format must be used for each task using word (or as a pdf if desired)
Word Count: See detail per task. Overall limit of 600 words
BACKGROUND
Mettricks ltd is a small business, based in Liverpool, operating within the education sector. It specialises in sourcing scientific equipment from a variety of local suppliers which it then sells on to schools in Manchester area to support the science curriculum that they are teaching to.
Mettricks was set up by Gavin Skinner in August 2019. Gavin had previously spent 20 years working within educational supply businesses, and had decided to use his expertise, contacts, and experience to strike out alone.
Gavin used 105,000 of his own savings, and 45,000 of bank financing from The HSBC Bank. The bank was happy to lend Gavin the money based on a sound business case forecasting that Mettricks would break-even within the first year of trading.
Once the financing had been secured, Gavin busied himself setting up the business. He found warehousing and office premises, and set about securing supplier relationships so that he could source inventory. He also recruited a warehouse manager and IT manager, together with a part-time office manager and a salesperson whom he intended to pay on a commission basis.
As is common practice in this sector, revenues originate from a combination of online orders (via a bespoke website designed by the IT manager) and a catalogue sent directly to schools. Gavin`s extensive contact list in the industry meant that the business could start with a healthy looking customer database.
By the end of 2019 all the pieces were in place and Mettricks commenced trading in January 2020. It is now the end of the first year of trading and Gavin is keen to understand how the business has been doing financially. Gavin freely admits that numbers are not his thing. The office manager has recorded all transactions throughout the year, but is now seeking the help of an accountant to make sense of these numbers and perhaps give the business some advice on the way forward.
You have been contracted by Gavin to help with this. From the raw transaction data, you have produced a trial balance (Exhibit 1). As requested by you, the office administrator has also provided a schedule of the various business costs in terms of their behaviour (Exhibit 2). You intend to use this to produce management accounting information in a format suitable to support decision making within the business.