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Managerial Accounting and Business Analysis - Essay Example

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Managerial Accounting and Business Analysis

220.65

Over draft




Bank Balance &cash
100
354.01
1701.67

Total current assets
100
133.05
65.96

Total fixed assets
100
377.74
187.27

Total assets
100
56,91
66.17

Account payables
100
117.67
0.32

Retained income
100
216.71
130.16

Total liabilities and equity
100
156.68
188.85

Income Report for Bell way Plc
Figures in million of pounds

2003 000
000

2004
2005

Turnover
954,197

1,092,571
1,178,063


Gross Income
739,479


829,598
280,402

Trading income
172,762


213,277
229,448


Interest received
1,427


1,361
2,267

Earnings before interest and tax
169,251

205,530
218,163

Interest paid
5,811

10,477
13,474

Taxation
50,687

61,700
65,400

Earnings after tax
169,251

205,530
152,763

Dividends
24,166
29,864
37,137

Retained income for the year
94,398

113,971
115,620








Balance sheet for Bell way Plc.


2003
2004
2005

Assets
16,200

16,673

16,203

Stock
478,935

587,635


Over draft




Bank Balance &cash
3,468

4,926
703,048

Total current assets
482,327

590,246
697,649

Total fixed assets
16,200

16,200
697,649

Total assets
482,327

590,246
681,446


Account payables




Retained income
94,398

113,971
115,626

Total liabilities and equity
482,327

590,246
697,649

If the above results are converted into indexed values form the following results can be obtained.



2003
2004
2005

Assets
100
102.47
109.26

Stock
100
119.56
145.27

Account receivables
100
100
100

Over draft




Bank Balance &cash
100
135.83...
Recommendation according to horizontal analysis: Though the investment decision cannot be taken only on comparison it can serve as one of the criteria. In case of two companies the profits and turnover had shown a trend of increasing. The total current assets of the Telford was not showing consistent trend when compared to Bell way Plc. The account payables in the 2006 were less for Telford and thus it maintained a increase trend in profit. But the decrease in account payables may show affect in the coming year and the increase trend may not be this much stronger. In contrast to Telford the Bell way was increasing the current assets along with account payables done and still maintaining the increasing trend of profit. This tells us about the good marketing, payment, asset increasing and profit retaining strategies and according to comparison it is advisable to invest in Bell Way
According to vertical analysis the items in the income account were calculated as the percentage of turnover. This tells us about the healthy and unhealthy trends of profit making, the company is experiencing.
In vertical analysis it can be observed that the bank balance, current assets were not following a healthy trend in case of Telford Plc. The liquidation of assets was maintained as cash in telford. ...Show more

Summary

In the present context we have to construction companies available to invest operating in a same stock exchange. It is advisable to choose the best after performing all the above analyses on the basis of financial reports of the companies from 2003 to 2005.
Author : bryon63
Managerial Accounting and Business Analysis essay example
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