Topic 8 Financial Statements

@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.

@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

@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.

@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

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

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

Agreed with @Trephena

@Amarain Hi there!

References are a bit like court evidence, they should be as accurate and complete as possible. So you should always try to identify the actual author if there is one e.g. if a newspaper article has the journalist’s name use that not the name of the newspaper (don’t panic everyone if you haven’t – I am stating ‘best practice’). So in the example you cite ‘CEO XYZ, 2014’ is best if you are specifically referring to the CEO report. With the FS they are actually prepared by auditors for the company as a whole so using XYZ 2014 is fine – Think about it a lawyer helps a witness to prepare a witness statement but it is still attributed to the witness not the lawyer.

@awais – it very much depends on the company. I always recommend scouring the highlights that the directors report each quarter and at year end on the company website as they often include industry specific KPIs and these are what turn a same-old, same-old analysis into a more intelligent and appropriate one.

If the trends for payables and receivables are stable then that is about all you need to comment on and compare.

I am in big trouble as I selected a company whose year end was June and I chose a competitor whose year end was December. My mentor didn’t notice that neither that I. I have just seen that and my project is all most complete.I tried to contact my mentor but he is on a vacation. What should I do? Please guide me I m in big trouble…….

Thanks for your reply.

I have read your response to @akonda but my point is this that I have done ratio analysis according to the annual financial statements. The difference between both these companies is 6 months. What should I do now? Should I add the Comparative financial statements of the two quarter to the june company to bring it to december 2013 or what should I do ? and if I continue without changing anything then what reason should I state???

Your response will be highly appreciated.Thanks!

if we don’t use latest financial statements would the examiners fail me?? As i am using 2010-2013 financial statements and 2014 statements are available now but for that i have to change major portions of my analysis and i don’t have much time for that to do. Also in my first attempt i used 2009-2012 statements and at that time 2013 statement was available but examiner didn’t said a word about that and praised my analysis.