Finance Assignment Solution_ Words 3088 (GC01369)

Contents

Task 1.

1.1 Analysis of business structure and financial structure and reporting requirements.

Business Structure of Greggs Plc UK.

The financial structure of Greggs Plc.

Reporting requirements for a company like Greggs Plc.

Comparison with other possible structures.

1.2 Calculation of useful ratios to measure Greggs plc performance.

1.3 Compare the figures for two years and comment on the finances of the business.

1.4 Advise a potential investor to invest of £50, 000 in business.

1.5 Advise on suitable sources of finance.

Sources of finance.

Assessment of implications of different sources of finances.

Recommendation for resourcing fiancé for the business.

1.6 Advise on how working capital can be effectively managed.

Task 2.

2.1 Cash flow forecast

2.2 Recommendation for managing cash flow and/or sourcing finance as required.

Task 3.

3.0 Projects Overview.

3.1 Assessing the projects using different methods.

1. Accounting rate of return (ARR).
2. Payback period (PP).
3. Net present value (NPV).
4. Internal rate of return (IRR).

3.1 .1 Accounting rate of return (ARR).

3.1.2 Payback Period.

3.1.3 Net Present Value.

3.1.4 Internal rate of return (IRR).

3.2 Recommendation to choose one to invest in.

4.0        Reference.

Task 1

1.1 Analysis of business structure and financial structure and reporting requirements

Business Structure of Greggs Plc UK

Greggs Plc is the UK’s leading bakery retailer specializing in freshly made bakery food. With over 1,570 shops across the UK served by ten regional bakeries, 20,000 employees are proud to serve 6 million customers each week. It is a growing business with its passion for backing and driving for quality and value (Annual accounts report, 2013). The company makes a financial advantage for the shareholders and these corporations also provide taxes to the country of operation. These companies are a vital segment of any specific economy. According to Berkley et al., (2008), companies provide employment to the people of any country of interest where corporations can be profit or nonprofit-centric.

The financial structure of Greggs Plc

The financial structure is the way of financing the assets of the company such as shareholders’ equity, short-term liabilities, and long-term liabilities. Greggs plc includes these in its financial structure.  According to the Greggs Plc Annual Report (2013), the company financial structure includes total assets £ 328,357, total liabilities £101,567, total net asset £226,790 and total equity of £ 226,790.

Reporting requirements for a company like Greggs Plc

Every company must follow a set of rules and regulations like IFRSs and IAS in the UK for making its financial statement (Atrill and McLaney, 2011).  Greggs Plc FRS 102, which is the Financial Reporting Standard applicable in the UK, in reporting financial information (Greggs, 2014).

In addition, according to Atrill and McLaney (2011), the financial statement should include the total profit, net profit for any financial year where the income statement comes first which states the revenue and costs of the organization and these things ultimately are shown in the capital of the business. According to Kermit and Larson (1997) the circulation of the finances, capital or investment has to be presented in the financial statement of the organization. Furthermore, the financial statement of a business organization also needs to include all current, fixed and all tangible and intangible assets and has to show the total capital or total liabilities of the organization.

Comparison with other possible structures

Sole Proprietorship Business: This kind of business organization operates under single ownership facing very few legal bindings and the proprietor has to take all the liability for the organization (Khan and Jain, 2010).

Partnership Business: Partnership business organization consists of two or more owners sharing the amount of knowledge, capital and labor and skill so that they can be equal in the business operation. All of the partners are equally liable for all the liabilities, profit and loss incurred by the organization. They also share an equal amount of the loss or profit of the business (Khan and Jain, 2010).

Non-profit organization: A nonprofit organization operates under the provision of some legal restrictions that the organization has no chance to share its profit with the shareholders of the organization. The profit the organization makes is only for the further business expansion or betterment of the community. The most money gathered by the nonprofit organizations comes from the fund of the general people; consequently, the general people make the best decision to serve the deprived people. To establish a nonprofit or charitable organization the initiators need to take permission from the authorized bodies (Khan and Jain, 2010).

1.2 Calculation of useful ratios to measure Greggs plc performance

Financial ratios are useful to examine different aspects of financial performance for planning and control purposes which are mainly important for managers in a variety of decision areas like profit planning, pricing and financial structure (Attrill. P, 2010).  Broadbent, M and Cullen. J (2003) says a ratio is only meaningful when it is compared to another ratio. There are a number of subsidiary ratios within each major category. The analysis on Greggs plc Annual Reports and Accounts (2012) shows; a particular number of these subsidiary ratios are significant to measure its performance.

The formulas of all the ratios in the following table are based on Atrill. P (2010) and all the information for calculation are based on Greggs plc Annual Report & Accounts (2012)…………………………..

 

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