Topic 8 Financial Statements

Hi, I have chosen to work with on a company that has a year end in March . Since March 14 , a quarter statement has been released and by the RAP submission date( mid November) another quarter would have passed ending in September. Am I expected to base my RAP on these statements too or can I prepare my RAP on the last three years upto march 14? Please advise .

@sadsingh You are not expected to use the quarterly statements. If the latest full year ended in March 2014 then that is your reference year. Note: We have covered the subject of dates of financial statements in quite a bit of detail on the Forum 'Quick clarification: Financial year Results' so you may wish also to read the queries and replies there

@trephena I apologise for not having checked there prior to posting my query. Thank you for your reply. Appreciate it.

hello , I need your advice about f/s. company i have selected is LUCKY Cement in Pakistan, and Its competitors are Fauji Cement Company ltd and Bestway cement ltd both in Pakistan. The problem is the Lucky Cement hasn't issued their annual report yet but only unaudited quarterly statements, same is the case with Bestway cement but Fauji Cement company ltd annual report 2014 is available. Now my question is can i use 2013,12 and 11 reports or i must use 2014?? sorry didn't know that for f/s dates discussion there is separate thread. i have posted there as well.

hello the company i choose for topic 8 has more than 20 subsidiaries should that be a problem? or i just need to analyse the parent company i choose and compare it with competitors which do not have so many subsidiaries

@trephena Hello Could you please advise how many slots available on the OBU website that can take uploads? what i mean is whats the maximum number of files that can be uploaded on the OBU website please for example If you have files like; RAP, SLS, PRESENTATION SLIDES, EXCEL and 2 PDFs(being financial statements for the two companies). Can all those be uploaded?

@lamech311 - yep you should be fine on the number of files (I think it will take up to about 10- but they expect the ref list to be loaded as a separate file). However there is a limit on file sizes -so see the latest P29/P30 Info PacK for details as files that exceed the individual size limit will be rejected automatically by the system.

@trephena The annual reports of the company that I am focusing on Is providing a consolidated and a non consolidated form of financial statements. So is the comparator company's annual report. I am not sure which to base my analysis on. Please advice.

@trephena Thank you for answering my query. I have another one to ask you. The annual reports of the company that I am focusing on Is providing a consolidated and a non consolidated form of financial statements. So is the comparator company's annual report. I am not sure which to base my analysis on. Please advice.

@sadsingh - you need to compare like with like to be able to make meaningful comparisons so either both single company or both consolidated (my gut feeling is that the consolidated offer broader scope). As the choice is yours why not read the CEO/ Directors reports and get a real feel for things before you start doing your serious research? - as I have indicated in my article on Evaluation on our home pages it can be very enlightening to discover company strategies and really improve the quality of the E & A section

@ trephena Hi, 1). Is it necessary to draft the financial statements in excel then convert to PDF( as an evidence of using spreadsheet) or can I save the PDF pages directly from the annual reports that show the financial statements? 2). On the annual reports there are several pages of notes following the financial statements. Are they suppose to be included along? 3). Is it ok to save the ratio analysis page in the annual report along with the corresponding statements or should that be saved separately? Please advice, Thank you.

@sadsingh 1. you need to include some evidence of use of spreadsheets with your work to fulfil the IT criteria so bear this in mind. Maybe show some raw figures and how you did the graphs from these. It doesn't have to be pretty, pretty - just evidence that you know how to do it and you load it as one of your appendices 2. I don't think the markers want or have the time to read all of the annual report so only include the financial statements unless there is anything that is particularly relevant in any notes. Remember your explanations have to go beyond the annual report as just citing the notes to the accounts will not get you a pass as it does not really explain the all important underlying causes. Also remember there is a limit on pdf file sizes so see the Info pack for these 3. Not sure exactly what you mean - yes you can have them in the same file if you want or different files. You can load up to about 10 files provided none of them exceeds the individual file size limit

@ trephena I deeply appreciate your help. Your posts are always helpful.

Hi people! is there any limitation to the number of pages for the appendices, I am thinking of pasting my financial statements for the three years which means three pages and also another 3 pages for my comparator company and then my ratios among other appendices?

@denmaster - file size limits, so see the Info pack for these

Hi Trephena, I am writing thesis on topic 8 and for analysis I have selected Marks & Spencer as main company and Next Plc as its competitor. Problem that I am facing is that both companies year-end is different. Year-end of M&S is on first Friday of the month of March and Next Plc is having year-end in January. Can I select these companies for analysis???

@yamna - This is absolutely no problem as the year ends are fairly close together (and they both include the same Dec periods and at least the first few weeks of Jan which are the busiest periods in UK retailing)

Thanks Trephena... Am I required to extrapolate Jan financial statements till Mar by adding quarter accounts??? Can I compare marks and Spencer with next plc???

@yamna - no need to extrapolate just use the annual reports because they are close enough - extrapolation is never mandatory just the use of the latest full year accounts is. Yes you could compare these two but remember that M & S has an important food and grocery segment and also a financial one and Next doesn't. There is no perfect match. Possibly the closest match in terms of segmentation and customers would be John Lewis (they have diversified into Insurance) but that is a partnership so your investor section would be different as you would have to compare returns to shareholders with 'partner' bonuses. Also of course their regulatory frameworks are different but that should not in itself impact much if the same sort of information is available for both.

Trephena please guide me in company's selection (some options of most suitable company's for analysis)....

@yamna - This is something I am reluctant to do as I think the choice should be a company the student is interested in and genuinely wants to find out more about it. However I really think you could go for M&S and John Lewis as the latter does make its annual report publicly available....and before you ask there wouldn't be a problem with it having an April 2014 year end - it is near enough. For anyone just reading these forums for ideas for future RAPs, JL would be suitable for T17 and especially T20 as the organisation prides itself on good governance and being a stellar corporate citizen and was founded on these principles

hi need the help !!!! please tell me as soon as possible should i use consolidated f/s or single company f/s i am almost done with typing in single company f/s in excel sheets of competitors and company i chose and left with ratio analysis only. so should i go with single company f/s or consolidated f/s???? reply as soon as possible thanks in advance

@awais21 - I have seen RAPs passed on either approach taken by students. You work needs to be coherent and hang together properly so that it reads well and explanations are clear. So much may depend on how good the CEO and directors reports are and other information available - if these are better for the group then I would go for that and the group approach tends to give more scope for the SWOT& PESTLE too.

Hi Trephena Whenever we are quoting anything from book, web page, directors' report etc. will it be exact words or we have to write in our own words. Is there any percentage defined say 30% can only be quoted rest should be our words. Can we use material from Wikipedia? If we are quoting anything from ACCA books, how we will cite it as there is no edition reference nor writer name?

@trephena thankyou very much for the answer. u r doing great service to people like me who are wandering around. Keep up the good work Regards

1.When typing the financial statements into excel do I have to have different excel files for statement of financial position and the Comprehensive income or do I put them in as sheet 1 and 2 in the same excel file? 2. I am almost 50% through my Rap but wanted to enquire on the 3 year analysis as I type in excel do I have a column for 2013, 2012, 2011 which looks like an analysis of 2 years 2011 to 2012 and 2012 to 2013 or do I type in 2013,2012,2011 and 2010?

If comparative figures are restated than ratios will be calculated on restated amount or on the original figures?

You must use latest figures (restated) in your RAP.

Mostly companies use a format for SOFP in which assets are at the top and then equity& liabilities at bottom. It is opposite in the case of my company, equity and liabilities are at the top and assets at the bottom. I have produced the extracts as they are in the annual report, in an excel file i.e. equity&liab top, assets bottom. Does this matter ? please do reply

@anneq7 - no this does not matter. Banks always traditionally used to show their most liquid assets first in their BS. So current assets always came before the fixed assets (I have no idea if this is still the case as I have better things to read than financial statements!!! :-) )