Accounting for Manager

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 Table of Contents
Introduction......................................................................................................................................3

Task 1...............................................................................................................................................3

Task 2...............................................................................................................................................6

Task Three.......................................................................................................................................6

Task Four.........................................................................................................................................7

Task Five.........................................................................................................................................8

Conclusion.......................................................................................................................................9

References.......................................................................................................................................9

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Introduction
In addition to being a chocolatier and chocolate producer, Hotel Chocolat has more than one
hundred stores around the United Kingdom. This is the first time that a British firm has grown
cocoa on its own plantation, according to Hotel Chocolat. With the use of tools such as ratio
analysis, cash flow analysis, and other financial analysis techniques, any firm today may analyse
the performance of their financial situation. In this report, Hotel Chocolat Plc. evaluates the
company's performance over the previous three years Huang, et al., (2019). The financial analyst
must be examining and evaluating the performance of the organisation with the assistance of
ratio analysis.

Task 1
Ratio analysis

The arithmetical components in the ratio are simply emphasised in the context of the statistics
and the financial statement (Hajiha, and Azadzadeh, 2020). It is a significant tool for analysing
financial data, and it is used often. The ratio is critical in all aspects of management, including
planning, directing, coordinating, managing, and other aspects. On the basis of financial ratios,
determine your capabilities, efficiency, and other factors.

Specifically, the financial analyst is required to compare the following ratios in this report:

 Liquidity ratios
 Profitability ratios

Liquidity ratios

Current ratio

This ratio is used to evaluate a firm's liquidity status and to assess how well the company will
meet its short-term commitments in a given year. For want of a better phrase, it is used to gauge
a company's existing capacity to pay back its debt (Pouyanrad and Masoumi, 2020).

The current ratio is a measure of the relationship between current assets and current liabilities, or
current assets and current liabilities. It is most often seen in a 2:1 ratio.

Formula for this ratio is current assets / current liabilities

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 Year 2020 2019 2018
Current assets 228 369 502
Current liability 585 585 596
Current ratio .3897 .6307 .8422

Analysis: Because the ratio of three years will be less than one, the company will be in a difficult
position. However, because the ratio of 2018 to 2019 will be less, the company will be able to
pay their liability. If this trend continues in the following years, the company will be able to pay
their entire liability and earn a good reputation in the market.

Quick ratio

Liquidity to current obligation is a ratio that demonstrates the connection between liquid assets
and current liabilities Cheng, et al., (2020). Alternatively, this ratio displays all of the short-term
assets and all of the short-term liabilities. This is the ratio that is mandated by the 1:1 standard.

Quick ratio = quick asset/quick liability

Hotel choclat plc quick ratio

Year 2020 2019 2018

Quick asset 1401 1275 1426
Current liability 126 98 235
Quick ratio 11.11 13.01 6.06

Working capital ratio:

From a financial standpoint, this ratio is the most stable source of cash available. This metric
evaluates a company's ability to pay its debts. Working capital is defined as the difference
between current assets and current liabilities. To be considered reasonable from an industrial
standpoint, it must be 10% of net current asset Barr-pulliam, et al., (2019).

Formula of working capital ratio = net working capital/net asset employed

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 Year 2020 2019 2018
Current assets 1750 1587 1603
Current liability 126 98 235
Total assets 3556 3272 3249
Net working capital 1750-126/3556=0.46 1587-98/3272=0.46 1603-235/3249=0.42
ratio

If a corporation increases its working capital, it will be able to pay off all of its short-term loans.
In general, more working capital indicates that an industry is in a good position. In this table, the
net working capital ratio is larger in 2019 and 2020 when compared to 2018, indicating that the
firm may develop fast in these two years Jones, et al., (2018).

Profitability ratio: Every company organisation must be operated in order to maximise profits or
minimise losses. The corporation also wished that the value of industries be greater than the
value of its own money and risk incurred. In most cases, the ratio is calculated using net sales.

Gross profit ratio

: this ratio indicates the link between the net sales and gross profit. It is measured in a percentage

Year 2020 2019 2018

Gross profit 1446 1429 1172
Net sales/revenue 2441 2401 2014
g/p ratio .5923 .5951 .5819

Analysis

The higher the g/p ratio, the more likely it is that the corporation will be able to reduce its direct
expenditures. The lower gross profit in 2018 when compared to the greater gross profit in 2019
and 2020 demonstrates that the firm is in a strong financial position.

Formula: net profit/net sales

The link between net profit and net sales is represented by this ratio. It is also expressed as a
percentage of the total.

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 Year 2020 2019 2018
Net profit 182 160 157
Sales 2441 2401 2014
n/p ratio .07455 .0666 .0779

Analysis: If a firm's net profit is greater than the industry average, this indicates that the
company is in a favourable position. If it is less than that, the firm is in a bad situation. When
comparing 2019 to 2020 and 2018, the corporation earns a higher net profit, as seen in this table.

Task 2
Financial ratios offer business leaders with a method of evaluating the success of their
organisation and comparing it to the performance of other comparable organisations in their
industry. Comparing and analysing the links between different financial information components
of a corporation is made possible via the use of financial ratios. Results from many periods are
more effective when compared to one another in this manner. This enables management to track
the organization's performance over time and identify warning signs of danger in the
organisation. Every business owner should be aware of a number of critical financial measures
that may be used to analyse the financial health of their organisation Crespo, et al.,(2018). Each
of the company's financial ratios provides a unique perspective on the company's business
activities. The performance of chocolat plc. is examined in Task 1 with the use of ratio analysis,
which reveals that the company's performance is improving from 2018 to 2020, as shown by the
graph. The company's liquidity and profitability are both strong, and it is wise to put money into
the company's business activities as much as possible. The importance of ratio analysis in
investing decisions cannot be overstated. It not only aids in the understanding of how the firm
runs, but it also makes it possible for investors to compare the proper investment possibilities
with businesses in the same area or even with none at all, if necessary.

Task Three
Financial analysis shows an important role in determining a corporation's tax performance. They
are particularly important for credit-enhancing borrowers. Certain finance groups use multiple
standards to assess a corporation's fiscal stability. Financing will be considerably cooler if the
corporation proves to be financially comprehensive (Allain et al., 2021). Its real goal is to
connect the essence of a corporation's monetary place. When a corporation does something

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wrong, management looks difficult choices. Such exertions can be more proactive if the
government understands how fiscal indicators are growing and underwriting the corporation's
monetary stability. Financial analysis can be divided into four groups. These benefit you evaluate
your corporation's liquidity, solvency, productivity, and profitability. The significance of these
procedures is not inadequate for usage by traders and stockholders. Examination and
individuality will retain you affecting in the long run, and metrics like these will help the
corporation. This benefits governments to evade financial difficulties such as lost outlay and
bankruptcy. Present indicators are important for calculating a corporation's cash flow. Present
relationships remain in the controller as currency moves faster among debtors. If the debtor is
elastic, the association at least draws the actual painting. Standardized trade performed with
debtors can benefit you by getting back more currency. Transaction needs should be clear from
original transactions and the credit period should be as little as possible. Short-term indicators
are grounded not only on short-term assets but also on short-term debt. You need to wage as
repeatedly or as soon as possible. It will decrease the sum of short-term debt and thereby
progress the short-term ratio. Early payments by creditors can save attention and profit losses,
which can have an important impact on a corporation's effectiveness. Return on equity is a
display of a corporation's effectiveness. It indicates whether the business is "good" or "bad" to
create money. First, return on equity (ROE) benefits depositors estimate a corporation's
predictable profit on equity from the shares held by its stockholders. Increasing Profit or Sales
Corporations need to equilibrium increased revenue with cost control. Therefore, upholding
spending and dropping costs in answer to enlarged revenue is the extra strategy for enlightening
ROE. For example, a company can close a blocked commercial center to decrease unnecessary
expenditure. An additional important cost-cutting technique is rationalizing. However,
corporations need to confirm that the sufferers of these workforces do not contribute
significantly to their revenue (Anessi-Pessina et al., 2021). A share buyback is a tax law to raise
ROE. When a company buys back stocks from its shareholders, the number of stocks held by the
shareholders drops.

Task Four
As of the close of the fiscal year, the Group continued strong with a net worth of £ 3.43 million
(2019: £ 3.17 million). This includes cash investments of £ 860,000, brand-related costs (2019: £

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1.07 million), and intangible assets of £ 1.58 million (2019: £ 1.56 million) (Tan and Yeo, 2021).
Inventories rose to £ 349,000 (2019: £ 312,000) forward of the expected increase in raw
measurable inventories was to ease the UK's blockade due to the Brexit product turmoil and the
COVID 19 pandemic. Faced with a more difficult and crowded market, the corporation sustained
to capitalize on its core brands, increasing total revenue and achieving even more money-making
results this year . The UK location has been prolonged from 45,000 m² to 80,000 m², with a
novel truffle (Choi, 2021) machine, a second, more velvety refill section that magnifies
capability, for the supreme nearby prepared vegan nut milk chocolate. From 21% to £ 164
million in the 52 weeks leading up to June 27, 70% of sales come from the store's six-month
online, company and payment transactions. The closure schedule has been changed. Profit before
tax enlarged from £ 2.4 million in the preceding year to £ 10 million. Following the £ 40m
allocations in July, World Bank cash on September 26 was £ 15.8m and a border of £ 45.8m. The
cost of deals ratio declined from 45.1% to 44.4%. Although COVID19 has incurred significant
additional costs, significant investment has been made in e-commerce, new products, and
distribution systems to support future development. The group paid the reserves for the
coronavirus work maintenance program set up by the British Government that year on
September 24, 2021. Gross profit as a ratio of comparative dealings with 3.1 million volumes
increased by 90 base facts from 60.9 to 61.8%. The gross profit boundary was 61.0% in the first
half of 2020 but was 65.0% in the first half of 2020 beforehand COVID. Enlarged sales of third-
party products due to increased inventory income and blockages due to decreased inventory. A
margin of 63.0% compared to the second half of 2020 means an upsurge of 10 points in the
second half. The definite EBITDA was £ 28.6m, an upsurge of £ 7.7m after deducting
impairment costs. EBITDA enlarged by £ 17.2 million as an outcome of augmented deals
(Collier,2015). Operating profit improved by £ 1.4 million yearly and operating expenditures
enlarged 19% to £ 11.6 million. Net sales were £ 2.44m, up 2% year-on-year. Red Leg Spiced
Rum continued to be the leading well-organized driver with sales growth of 26%. Blackwood gin
decreased by 57%, and Blackwood vodka and bravo black vodka decreased by 5% and 18%,
respectively.

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Task Five
Numerous governments have replied to preventative fiscal activities in ways unparalleled in the
modern past, from the problems of day-to-day processes to the massive termination of safe trades
and measures. Given the small period from the end of the reporting date to the occurrence of the
widespread, the financial influence of the recording period until March 31, 2020, may be
negligible for most companies (Ewert and Wagenhofer,2021). Noteworthy and constant drops in
market prices, permanent asset or use of asset prices or adverse fluctuations in practicality, or
severe variations in the trading environment may need long-term asset damage testing.
Companies facing deal drops and supply chain disruptions due to COVID19 are essential to
ensure that their book value necessities are met. Perishables, short-lived or short-lived matters,
and unusual regular supplies are the most unpreserved. Manufacturing can fall underneath
normal ethics due to reduced manufacturing costs, unanticipated downtime, or major disruptions
due to labor and sensible shortages. In this case, additional fixed costs that cannot be allocated to
manufacture due to underutilized capacity are recorded as prices when suffered (Kuczyńska-
Cesarz,2021). Given the impulsiveness of fiscal markets, governments must value possibly
depreciable assets, particularly COVID 19 or its public issuer's fixed income or equity products.
Average sales for the full year were relatively constant, up from 59.5% in the previous year to
59.2%.

Conclusion
Financial indicators help small business owners and managers assess their success against
predefined internal goals, specific competitions, or the market as a whole. In addition, tracking
different ratios over time is a powerful way to find early patterns. Bankers, investors, and market
watchers often use metrics to determine a corporation's financial position. Percentages are
determined by separating one statistic from another. Total sales individually according to the
number of employees. Metrics help business owners analyze and quantify relationships between
products. They are easy to measure, easy to use and provide business owners with insights into
what is happening in the industry. These perspectives are not always noticeable unless you look
at the financial statements.

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References
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