Caribbean Examinations Council

Cape Accounting School Based Assessments

Table of Content
Acknowledgement

I am taking this opportunity to thank all the persons who supported me with this S.B.A

assignment. I would like to express my special thanks of gratitude to my parents for providing

me with the resources and motivation needed and as well as my teacher Mrs. Ashley who

supported me in the completing of this S.B.A assignment.

Introduction

The Berger Paints Jamaica Limited is the business the researcher has chosen to conduct his

research on. Since 1953, Berger Paints Jamaica Limited has been providing innovative, cutting-

edge paint products and services, based on the Company’s long held ethos of delivering lasting

beauty and protection to homes and institutions across Jamaica. Berger Paints Jamaica Limited

remains the largest paint-manufacturing entity in the English-speaking Caribbean, with 95% of

the company’s products manufactured locally. Backed by a strong technical support team,

Berger Paints Jamaica Ltd. has conducted extensive research to develop paint products

specifically for the Caribbean environment. Such research has led to brands including Berger

303 Flat Emulsion, 404 Gloss Oil, Everglow Low Sheen Emulsion and Magicote Flat Emulsion

to become brand leaders in their respective brand categories.

Berger Paints Jamaica Limited holds the distinction of being the first regional company in the

paint sector to achieve the International Standards Organization (ISO) 9001:2000 Quality Mark

certification in 2002. In 2006, the company attained the ISO 14001:2004 Environmental

Management Standard. In the same vein of high achievement, Berger Paints Jamaica Ltd. has for

over 45 years rewarded exceptional performers in sports, culture and education by sponsoring a

number of annual awards and scholarships. Notable are Berger’s long-standing sponsorship of

the Jamaica Netball Association and the Gibson Relays. The company also sponsored the

Jamaica Basketball League for 30 years.

In 1992, Berger Paints Jamaica Limited, became a publicly listed company on the Jamaica Stock

Exchange recording some 6,000 local shareholders. Berger’s success is attributed to its strong

and competent team of employees, 60% of whom have served for more than 10 years.
Aims

1. To analyse the performance of Berger Paint Jamaica Limited over the years 2016 and 2017.

2. To assess whether the resources of the business are used in the right manner

Objectives

1. To compare the years 2016 and 2017 and see which year was better

2. To make recommendations to areas of the business where needed

Literature Review

Performance Analysis is the process of identifying the financial strengths and weaknesses of the

firm by properly establishing the relationship between the items of balance sheet and profit and

loss account. It also helps in the short-term and long-term forecasting and growth can be

identified with the help of financial performance analysis stated by readyratios.com

According to the ReadyRatios ‘analysis’ is referred to as the assessment of the stability,

viability, and profitability of a business, sub-business, or project. A financial analysis is carried

out by professionals who prepare reports through the use of info obtained from financial

statements and other reports. Besides, one key area of financial analysis is the extrapolation of

company’s past performance into an estimate of its future performance.

As explained by Investopedia, accounting analysis is one of the most common techniques for

accounting analysis is calculating ratios from the data to compare with those of other companies

or with the past performance of the company. For instance, retur on assets is a common ratio

which is used for determining the efficiency of a company at utilization of its assets as well as a

measure of its profitability.

The main methods adopted for accounting analysis include:

 Past performance

The accounting analysis uses past statistics across historical time periods for a single company,

for example, the last 5 years.

 Future performance

The accounting analysis is performed by utilizing historical figures and certain statistical and

mathematical techniques, counting present and future values. This extrapolation method acts as

the main source of errors in accounting analysis for past statistics can play poor predictors for

future prospects.

 Comparative performance

The accounting analysis is also done through comparison between similar business companies.
The Berger Paints Jamaica Limited engages in methods to analyse the performance of the

business to make necessary adjustments to increase sales and profits. The company may use

ratios to see the profitability and losses of the business to compare performances of years to see

how the business is performing. The Berger Paints has made financial statements available for

the past years and current years to show the past and current performances.
Data Collection
In order to carry ou this Internal Assessment (IA), two methods of data collection were used.

The researcher used Primary and Secondary sources to obtain data for this project. These

methods were used as it was most suitable since the IA is focusing on the company’s

performance using the financial statements, it is reliable and quicker to retrieve in gathering the

necessary information needed. The primary source used was a Questionnaire, the questionnaire

was comprised of both open and closed ended questions. Open ended questions were used

because they have no limits or responses to them and acquire more information. Closed ended

Questions were used because they are easy to answer and it saves time

The secondary sources were retrieved from textbooks and accounting websites which included

information needed. The websites provided all the relevant information needed for example all

the financial statements and textbooks provided me with more knowledge giving me a better

understanding of what to do by using examples. It can be said that the information retrieved is

credible and valid as it was obtained from the company’s website.

There were many challenges faced by the researcher while carrying out this research. The

researcher faced challenges getting back questionnaires as they were not finished due to workers

being busy. The books that were used were borrowed so the researcher had to spend long hours

trying to get the necessary information needed so they could be given back. Some of the books

were faulty as some were old and some had insufficient information. The website of the

company was down at one point and also to find and write the information off the website was

time consuming
Data Presentation and Analysis
Financial Ratios

Current Ratio

The extent to which a firm can meet its short-term demands.

Current Ratio = Current Assets/current liabilities

Year

2017 1,136,042 / 379,841

= 2:99:1

2016 809,591 / 348,396

=2.32:1

Quick Ratio =

Quick Ratio measures the ability of a company to meet its short term obligations with its most

liquid assets

Quick Ratio = Currents Assets – Inventory/Current liabilities

Year

2017 1,136,042 – 342,616 / 379,841

2016 809,591 – 337,993 / 348,396

Accounts Receivable Turnover

The average length of time it takes a firm to collect and credit sales (in percentage terms)

Accounts receivable turnover = sales / average accounts receivable

Year
2017

2016

Gross Profit Margin

The total margin available to cover the operating expenses and yield a profit

GPM= sales – cost of goods sold/sales

Year

2017

2016

Operating Profit Margin

Profitabililty without concern for taxes and interest

OPM= earnings before interest and taxes/sales

Year

2017 365,688/ 2,363,088

2016 142,849 / 2,050,615

Net Profit Margin

After-tax profits and per dollar of sales

Net income = net income/sales

Year
2017 315,555/2,363,088

2016 122,137 / 2,050,615

Sales Growth Ratio

Evaluation

Berger Paints Jamaican Limited is a very profitable company. Over the period of the two years

there was a drastic increasing in the profitability of the company. The company has owned more

assets and has manufactured more with less expenses making more inventory to be sold at a

higher cost causing sales to increase and while selling more it has increased the debtors, cash

and also the bank but are still maintaining to have the same amount of liabilities which is very

excellent. The company does not owe a lot of money and does not have to pay a lot of taxes

which means the company can finance it day to day operations. The company has be involved in

more transactions so the business has gotten more comprehensive income and other incomes

without changing the owners equity.

Recommendations

Based on the research done and the finding, the researcher would recommend the Berger Paints

Jamaica Limited to:

1. Employ more workers and increase production so more of the products can be sold since the

company is very profitable and lot of buildings are being built and will need to be painted.

2. Continue to maintain the liabilities and not owe a lot or even try or lower the liabilities and

try to increase the comprehensive income.

Conclusion

The Berger Paints Jamaica Limited is doing very and is a very profitable business and which

increases drastically over the years.