Financial Decision Making
Verdant Leisure is a holiday park company operating in Scotland and the north of England. Assume the company is planning to expand its holiday parks from 14 to 40 in the next ten (10) years.
TASK 1 (1,500 WORDS)
You are part of the Accounting and Finance team at Verdant Leisure. Write a report to the Management of Verdant Leisure, introducing and evaluating the Accounting and Finance functions within the consideration of Verdant Leisure as an example. Your evaluation must include some examples within the Company where appropriate.
Using the financial statements of Verdant Leisure calculate the ratios required and comment on the company`s performance from an Investor with £10 million perspective.
Marks will be awarded for Structure and Presentation skills. The structure includes the orderly presentation of relevant material. In addition, the extent of the research is evidenced by the appropriateness and adequacy of in-text referencing. There must be a Cover Page and Contents Page, paragraphs of Introduction, Conclusion, and pages must be numbered.
Learning outcome 1: Explain the structure of and terms used within the financial statements.
Learning outcome 2: Apply management accounting techniques for planning, control and decision making within the Organisation.
Learning outcome 3: Calculate the main accounting ratios and explain their significance to users of financial statement.
Learning outcome 4: Demonstrate knowledge of the role of finance and accounting within the organisation with respect to both reporting and decision-making aspects.
Task 1 - Required
As an financial manager in Accounting and Finance team at Verdant Leisure, you are required to provide a report to the Senior Management Group on introducing and evaluating the Accounting and Finance functions within the consideration of Verdant Leisure`s financial situations.
Task 2 - Required
The summarised financial statements of Verdant Leisure are shown below.
Statement of Profit and Loss
a. Calculate the following five ratios for each of the two years:
(i) Return on capital employed
(ii) Net profit margin
(iii) Current ratio
(iv) Average Receivable days/ Debtors collection period
(v) Average Payable days/ Creditors collection period
b. Comment on the performance of Verdant Leisure, results from and position between the two (2) years from (a), mentioning possible causes, reasons and effects for the changes in the ratios.
Please reference your work according to the Harvard style.