Managerial Accounting and Business Analysis Essay

Managerial Accounting and Business Analysis - Essay Example 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 100100 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.