Analysis of Accounting and Personal Wealth Management

BMKT 21222

I.S.R. Gamage
BM/2018//133
University of Kelaniya
 Bachelor of Business Management (Special) Degree in
Marketing
For Group and Individual Assignments

Subject Details

Lecturer Ms. Poornima Gayathree

Subject Analysis of Accounting and Personal Wealth Management

Subject Code BMKT21222

Students Details

No Group Name

Student Name Student Number Signature

1 I.S.R. Gamage BM/2018/133

Nature of the Assessment Report

Assignment topic Uses of accounting information.

Word count 1334

Due date / Time 7th of June, 2021

Individual / Group Declaration

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I certify that the content of the above assignment is one of our original work and not copied
from any of the published or internet based documents. Without references we have not used
any of the other person’s original work or ideas. So the report or the work we have done is
free of plagiarism.

Signature I.S.R. Gamage Date 07/06/21

(Individual
Assignment)

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 i. ACKNOWLEDGMENT

First, I would like to acknowledge and extend our sincere gratitude to our course lecturer Ms.
Poornima Gayathree, Department of Marketing Management, University of Kelaniya for her
valuable guidance and encouragement, correcting errors and suggesting several improvements to
make this report successful. I am grateful and indebted to all the department staff of Marketing
Management. Not only that but also, I should be grateful to our government for supplying free
education for us. I would like to serve a special warm tribute for my respective parents for doing
everything for me. They are the main reason of my success. Apart that, I want to give my thanks
to all people who have help me in many ways.

Faculty of Commerce & Management Studies,

Department of Marketing Management,

University of Kelaniya.

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 1. USERS OF ACCOUNTING INFORMATION

i. External users

External users are those who aren't a part of the organization's internal processes yet who use its
financial accounting information. They have a direct and indirect stake in the firm and make
choices regarding it.

Investors

An interested investor may examine a company's prior financial activities in order to take decisions
about investing. the investor is interested in knowing if the company will generate an adequate
and continuous profitability. Their requirements are as below.

❖ Examining how the company's equity is being used by the management.

❖ Decisions on whether or not to expand investment or exit the business.
❖ In the case of a potential investor, is analyzing their current investment in the company or
the overall financial health.
As at 31 December 2019 (Rs.) 2018 (Rs.)
24,354,261 23,192,039
Total operating income
516,294,187 466,933,018
Total assets (LKR Bn.)
471,666,913 432,323,219
Total liabilities
63.12% 64.90%
Cost to income ratio

The total assets of the Bank were recorded at LKR 516 Bn. and represents a growth of 10.57%
over last year according to the above annual report information of Seylan Bank.

Lenders

Banks and non-banking financial firms that give loans in the form of cash are interested in data
that helps them to determine if their loans, and the interest associated with them, are being paid on
time. Lenders require accounting information to below requirements.

❖ A business's short- and long-term financial stability is valued.

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 ❖ to verify that the organization has the financial ability to pay both the interest and the capital
back.
❖ Ratio analysis provides insight into liquidity, profitability, and other factors.

Seylan recorded a net profit before income tax of LKR 5.099 Bn. and net profit after tax of 3.680
Bn. which is 15.40% higher than last year. And 8,422,292 Rs. Amount of cash in hand. (Seylan
Bank, 2019)

As at 31 December 2019 (Rs.) 2018 (Rs.)

Profit for the year 3,680,262 3,189,206

Total assets 516,294,187 466,933,018

Net assets value per share 88.61 94.54

Regulators and the government

Financial statements will be requested by the government in whose authority a firm is based in
order to assess if the firm paid the correct amount of taxes. And also in order to issue a credit rating
to the firm as a whole or to its securities, a credit rating agencies will need to evaluate the financial
statements.

Regulatory uses financial accounting information for below requirements.

❖ To maintain track of the company's compliance with all required accounting principles,
standards, rules, and regulations.
❖ The primary goal is to defend business integrity and investors.
❖ The tax department, as being one of the recipients of financial accounting information,
ensures that corporations calculate taxes correctly.
As at 31 December 2019 (Rs.) 2018 (Rs.)
24,354,261 23,192,039
Total operating income
5,098,640 4,666,252
Profit before income tax
1,418,378 1,477,046
Tax expense
Seylan Bank’s tax expense (income tax, VAT, NBT and DRL on financial services) for 2019 was
LKR 4.185 Bn. which is higher than the tax expense recorded in 2018. (Seylan Bank, 2019)
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Customers

Customers become interested in an organization's capacity to continue to exist and sustain

operational stability when there is a long-term relationship or contract between the company and
its customers. Their requirements are:

• Checking the rate of total manufacturing and the ongoing influx of inventories.
• Assessing the economic condition of its suppliers, which is important for ensuring a solid
supply chain.

As at 31 December 2019 (Rs.) 2018 (Rs.)

Loans and advances 379,259,064 326,882,538

Approximately 66% of the total portfolio of loans and advances to customers has a remaining
contractual maturity of less than one year. (Seylan Bank, 2019)

Suppliers

Suppliers are particularly concerned about the company's liquidity. They want to know about the
company's capacity to pay its bills, as well as whether or not it is a reliable source of supplies and
is not in risk of going out of business. Suppliers request information to:

• Examine their buyers' integrity by assessing their payback capacity.

• To Establish a mortgage rate and cash withdrawal arrangements with their clients.

90% of the suppliers are from local communities. Seylan bank use local suppliers in the provision
of services such as janitorial, security, mail room, catering, stationary etc.

As of 31 December, 2019 2018

Purchases from locally based 589.59 567.39

supplies (LKR Mn.)

Competitors

Competitors want to keep a competitive advantage over their rivals; therefore, they desire to know
about the financial condition of their rivals. Furthermore, based on the financial state of the other
firm, they may choose to adjust their plan.

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 • The Bank’s main CSR program “Seylan Pahasara” has contributed 200 libraries to the Sri
Lankan education sector (Seylan Bank, 2019)

All other banks be interested about the CSR expenses and campaigns of Seylan bank to take their
decisions.

ii. Internal users

Internal users are those who operate, manage, and handle the organization's day-to-day functions.
They make judgments on behalf of the company and are directly interested in the data.

Owners

The business's legal stakeholders and the parties who has the final authorizing power are the
owners. Owners require accounting information because,

• Their investment and profitability can be monitored monitored.

• To Keep track of their investment capital and analyzing its movement.
• To maintaining an observation on the company's general operations.

Cash flows from financing activities of Kothmale holdings

For the year ended 31 March Company

2019 (Rs.) 2018 (Rs.)
Dividends paid to shareholders - (502,400,000)

Net cash used in financing activities - (502,400,000)

Net cash and cash equivalents used in (1,335,203) (66,582,970)

This confirms that the dividend received on their shares this year is bigger than last year's dividend,
and that though profitability ratios may be reduced, it is feasible to benefit by becoming a
shareholder in Kothmale holdings. (Kothmale Holdings, 2019)

Managers

The owners and managers of small enterprises may be part of the management team. They require
financial accounting information to,

• To make Budgets, predict, analyze, and to make critical financial decisions.

• To make investment judgments, as well as to recognize warning and opportunity signs.

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 • Making well-informed and well-considered judgments by financial accounting
information.

For the year ended 31 Bank Company

December (Seylan Bank, 2019)
2019 2018 2019 2018
For the year Gross income 61,369,654 54 872,530 61,356,249 54,844,593
Profit before income tax 5,098,640 4 666,252 5,267,110 4,687,124
Income tax expense 1,418,378 1,477,046 1,468,858 3.971,536,268

Gross dividend 1,007,248 915,248 1,007,248 915,248

They make future judgments by comparing financial accounting data about their company, such
as profit, liabilities, income rate, and salary rate, and so on.

Employees

Employees care about the company's profitability and long-term viability. They be interested in
the company's financial status and performance in order to analyze expansion chances and career
potential. They require accounting information to:

• Examinee the company's financial status, which has a high impact on their salary and job
stability.
• Making decisions related on share-based compensation, such as ESOPs issued by
employers.
• To check to see if the employer is transferring the necessary payments to the proper parties,
such as the provident, and medical allowances.

This table shows the information of Seylan Bank that employees would be interested in.

Bank
For the year ended 31 December
2018 2018
24,354,261 23,192,039
Total operating income
3,360 3,344
Number of employees
6,249,124 5,973,776
Payments to employees
445,817 401,426
Contribution to Employee Provident Fund

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 2. CONCLUSION

Financial data, has limits as a prediction tool. Business is fraught with uncertainty, and accountants
have no way of knowing how the company will perform in the future. Users of past financial data,
on the other hand, might find patterns or trends that may be used to forecast the company's future
financial success by looking at the data. Internal and external users can benefit from collecting and
evaluating a set of historical financial data. Internal users, for example, might utilize financial data
as a prediction tool to determine if the organization's long-term financial performance is in line
with its long-term strategic goals.

3. References

Kothmale Holdings. (2019). Annual report 2019. Kothmale Holdings.

Seylan Bank. (2019). Annual report 2019.