Financial Performance of an Organisation over a Five Year Period

1. A brief description the research project and issue under investigation and an analysis of best practice in relation to this issue. (2.1 and 2.2).

This report will analyse and outline the company’s profitability, liquidity, solvency and investment potentials based on 15 ratios. All information is taken from the Next plc 2011 statement.

Abstract : Analysis of financial statement of a company is an important because it is useful to obtain Information

This article mainly refer to the company 's annual financial reports, industry reports and official website as references.

When you’re looking at the income statement, you can get information about profitability for a particular period. This is also called the profit and loss statement. The income statement is composed of both income and expenses. This statement can be used to deduct expenses from income and report either a net profit or net loss for that period. This statement will deduct all expenses from income and then report your net profit or net loss for that period. This will allow the business owner to determine if the business is bringing in a good amount of revenue to make a profit. The cash flow statement shows the movement in cash and balance over period. The cash flow can vary depending on the operating activities, investing and financing activities. This statement provides one business owner with insight to the company’s liquidity which is vital to the growth of the business. Reinvesting in business is very important, looking at the statement of retained earnings will tell a business owner how much were reinvested in the company. After profitable period, every big business has to give some of its profits to stockholders, and keep the rest amount as retained earnings. Out of all statements, retaining statement is important to companies that sells stocks to the public. This statement can also provide you with assets and liabilities information. These informations can be used to assess the financial health of your business. The results of a balance sheet will help the business owners to show the risk of liquidity and credit. Looking at these information you can measure trends and relationships to show where in the areas you can improve. These can also be compared to similar companies to show how the business measures up to leading competitors (Ali, 2010). In summary, the financial statements can provide a business owner

We conducted our research by searching our topic and its background information for general knowledge on the internet. We used a numerous amount of secondary sources off of the internet for our project. However, we did use some primary sources from books at our local library, as well as, other primary sources from personal

In research projects it is great to have an approach to locate viable sources so the book recommends conducting advanced/ narrow searches to aid in finding the most appropriate sources. In

The information found in financial statements outlines the financial activities of that company, and can help managers, creditors, and investors make many important decisions.

When organizations present financial statements for review, the information contained in the statements should be appropriate and clear enough as to enable evaluators or auditors of the information to make accurate estimations of the presenting organization’s financial status.

Primary and secondary sources are ways in which data can be retrieved. As Serakan (2006) stated, “Primary data refer to information obtained by the researcher on the variables of interest for the specific purpose of the study”. Various evidence suggesting to what methods of primary research can be conducted and which are most effective for the previously mentioned problem description are stated in this chapter.

Financial statements of the company are significant for the investors who would like to venture into the business operation. It gives them the insight whether the business is making profits or it is doomed to fail;

Financial statement measures the financial performance, liquidity and strength of the firm, it is important

Financial analysis is the examination of pecuniary and financial information to accomplish the companies’ commitment. This investigation resolves the migration of organizations’ possessions, to explicate external and internal operations (Berman & Knight, 2012, p 38). This just says, a way to gauge an organization achieved and failed operations. In this logic, one may agrees that a financial analysis appraises businesses’ operating effectiveness, liquidity, and capital structure.

Without subjecting these to data analysis, many fallaciousconclusions might be drawn concerning the financial condition of the enterprise. Financialstatement analysis is undertaken by creditors, investors and other financial statement users inorder to determine the credit worthiness and earning potential of an entity.

Financial accounting is a crucial process for any successful business. Atrill and McLaney, 2013 define financial accounting as: “the identification, measurement and communication of accounting information for external users (those users other than the managers of the business).”