International Financial Reporting and Analysis Week 5: Hand-In Assignment (Make As Refference Only)

International Financial Reporting and Analysis

 

Week 5: Hand-In Assignment—Attachment

 

Income Statement for the year to 31 January
 
 
 
 
 
 
2010
2009
2008
 
 
 
      £’000
      £’000
     £’000
 
Total revenue
405,607
378,799
348,650
 
Cost of sales
306,158
286,515
264,152
 
 
 
Gross profit
99,449
92,284
84,498
 
 
 
Selling general and administrative expenses
76,651
70,500
65,001
 
 
 
Earnings before interest and taxes
22,798
21,784
19,497
 
 
 
Interest expense
2,199
2,103
1,849
 
 
 
 
 
 
 
Income before tax
20,599
19,681
17,648
 
 
 
 
 
 
 
Income tax expense
7,199
6,950
6,364
 
 
 
 
 
 
 
Net income
13,400
12,731
11,284
 
 
 
Basic weighted ordinary shares
10,500
11,000
12,000
 
 
 
 
 
 
 
Diluted weighted ordinary shares
11,000
11,675
12,300
 
 


 

Statement of financial position
as of 31 January
 
 
 
 
 
 
 
 
 
2010
2009
2008
 
 
      £’000
        £’000
      £’000
Assets
Current assets
 
 
 
 
 
 
Inventories
37,769
38,362
36,375
 
Receivables
3,905
3,654
2,840
 
Cash and cash equivalents
7,275
5,569
7,373
Total current assets
48,949
47,585
46,588
 
 
 
 
 
Non-current assets
 
 
 
Land
25,600
25,400
19,000
Buildings
78,000
77,800
75,000
Plant and equipment
24,000
23,500
21,000
Accumulated depreciation
(13,120)
(10,771)
(10,395)
Total non-current assets
114,480
115,929
104,605
 
 
 
 
 
Total assets
163,429
163,514
151,193
 
 
 
 
 
 
Liabilities
Current liabilities
 
Accounts payable
47,721
46,500
43,471
 
Tax payable
7,669
11954
8,283
Total current liabilities
55,390
58,454
51,754
 
 
 
 
 
Long term debt
36,740
35,335
32895
Provisions
6,014
5,117
4,971
Total long-term liabilities
42,754
40,452
37,866
 
Total liabilities
98,144
98,906
89,620
 
Stockholders' equity
Ordinary shares
47,945
48,030
48,070
Retained earnings
17,340
16,578
13,503
 
 
 
 
Total stockholder equity
65,285
64,608
61,573
 

Summary of Significant Accounting Policies

 

General

 

The company operates three retail stores throughout the United Kingdom and is committed to providing individuals with high-quality products and value to customers. We have fostered a culture that retains devoted and well-trained employees who provide optimal service. Our accounting year ends on 31 January.

 

Cash and Cash Equivalents

 

The company considers investments with a maturity of 3 months or less when purchased to be cash equivalents. The company receives a majority of its payments due from banks for third-party credit card, debit card, and electronic benefit transactions (EBT) processed. These transactions normally complete within 24–48 hours and are thus considered cash equivalents.

 

Receivables

 

Accounts receivable consist primarily of receivables from suppliers for marketing or incentive programs. Additionally, amounts due from banks for customer credit card, debit card, and EBT transactions that take in excess of 7 days to process are classified as accounts receivable.

 

Inventories

 

Inventories are valued at the lower of cost or net realisable value using the retail method. This is computed on the basis of selling price less the appropriate trading margin. All inventories are finished goods.

 

Non-current Assets

 

Non-current assets are stated at cost, and management reviews these assets for signs of impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If the carrying amount is determined to not be recoverable, potential impairment is based on fair market value.

 

Cost of Sales

 

Cost of sales includes all actual product costs and costs of transportation.

 

 

 

Operating, Selling, General, and Administrative Expenses

 

Operating, selling, general, and administrative expenses include all operating costs of the company except those costs related to the transportation of products from the supplier to the retail stores.

 

Depreciation

 

Depreciation for financial statement purposes are provided on the straight-line method over the estimated useful lives of the various assets.

 

Legal Proceedings

 

The company is not involved with any current litigation.

 

Provisions

 

The company has designated an estimated amount for possible future shop closures and redundancy costs.

 

Dividends

 

The company declared and paid the following dividend amounts in each year to 31 January:

 

   2010                       2009                2008

                                                              £’000                      £’000                £’000
Dividends                                          12,638                      9,656                9,500                         

 

Retained Earnings                               762                        3,075              1,784

 

Beginning Retained Earnings      16,578                     13,503            11,719

 

Ending Retained Earnings                       17,340          16,578            13,503

 

Changes in Ordinary Shares

 

The company has been undergoing a systematic buyback of ordinary shares in an effort to increase the value of shares, while also reducing the threat of takeover.
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