PGBM01 Financial Management And Control.
This assessment covers the following learning outcomes from the module.
Knowledge
K1. A critical understanding of the key strategic financial statements of an organisation
K2. Understanding and evaluation of the uses of both quantitative and qualitative accounting information within an organisation
K3. Knowledge and understanding of theoretical concepts and frameworks to a range of practical situations in order to propose solutions to strategic business problems
Skills
S1. The cognitive skills of critical thinking and analysis in showing how the finance function can make a significant contribution to the successful strategic management of an organisation
S2. The skills necessary to communicate effectively at a senior level and be able to put these skills into practice
S3. Development of the skills required to independently access and process financial data
Part A
Bitmap plc is well established manufacturer of furniture in London. The board of directors have looked into the financial statements of the last two years and have noticed significant changes in different elements of Income statements and balance sheets. You are working in the same company as Management Accountant and directors have asked you to prepare a report on results of the two year`s financial statements. The financial statement of the Bitmap plc are given below:
Statement of comprehensive income for the year ended 2018 and 2019.
|
|
|
2019 |
|
2018 |
|
|
000 |
000 |
000 |
000 |
|
Revenue |
|
23,000 |
|
18,000 |
|
Less: Cost of sales |
|
|
|
|
|
Opening Inventory |
1,800 |
|
1,700 |
|
|
Manufacturing cost |
12,000 |
|
9,000 |
|
|
Total cost of goods available to sell |
13,800 |
|
10,700 |
|
|
Less: Closing inventory |
3,000 |
|
1,800 |
|
|
Total cost of sales |
|
10,800 |
|
8,900 |
|
Gross profit |
|
12,200 |
|
9,100 |
|
Less: Expenses |
|
|
|
|
|
Selling & distribution expenses |
4,000 |
|
3,000 |
|
|
Administrative expenses |
1,400 |
|
1,000 |
|
|
|
|
5,400 |
|
4,000 |
|
Operating profit |
|
6,800 |
|
5,100 |
|
Less: Interest payable |
|
1,000 |
|
500 |
|
Profit before tax |
|
5,800 |
4,600 |
|
|
Less: Income tax (30%) |
|
1,740 |
|
1,380 |
|
Profit after tax |
|
4,060 |
|
3,220 |
|
Less: Dividends paid |
300 |
|
200 |
|
|
Retained profit for the year |
|
3,760 |
|
3,020 |
Statement of financial position as at 31st of December 2018 and 2019.
|
|
|
2019 |
|
2018 |
|
|
000 |
000 |
000 |
000 |
|
Non-current assets (net) |
|
|
|
|
|
Land and building |
|
12,000 |
|
9,000 |
|
Equipment |
|
1,400 |
|
1,250 |
|
Motor vehicles |
|
1,800 |
|
1,100 |
|
|
|
15,200 |
|
11,350 |
|
Current assets |
|
|
|
|
|
Inventory |
2,360 |
|
1,800 |
|
|
Trade receivables |
2,300 |
|
1,600 |
|
|
Cash |
500 |
|
750 |
|
|
|
5,160 |
|
4,150 |
|
|
Current liabilities |
|
|
|
|
|
Trade payables |
1,100 |
|
1,500 |
|
|
Net current assets |
|
4,060 |
|
2,650 |
|
|
|
19,260 |
|
14,000 |
|
Non-current liabilities |
|
|
|
|
|
Loan stock |
|
3,500 |
|
2,000 |
|
Net assets |
|
15,760 |
|
12,000 |
|
Equity |
|
|
|
|
|
Ordinary shares of 1 each |
|
10,000 |
|
10,000 |
|
Retained earning |
|
5,760 |
|
2,000 |
|
|
|
15,760 |
|
12,000 |
Required:
1. Prepare a structured report for Board of Bitmap plc, which evaluates the performance of the company in relation to profitability, liquidity, gearing, asset utilisation and investors potential. Your report must be supported by the calculations of relevant ratios in the five areas mentioned above.