Activity For Business Studies ( Accounting for success)

Section A (10 Min)

Knowledge recollection

1) What is meant by Gross Profit?

2) What is meant by Net profit?
3) What is Sales Turnover?
4) What are dividends?

Section B (20 Min)

Use the internet and obtain information on accounts of the following:

a) a retail outlet in UK (e.g. Next, Marks and Spencer)

b) an international airline (e.g. SIA)

1) Take note of the profits and losses of the company in the last 3 years (or more)
a) Do you observe a rise or fall in profit and losses
b) What does it say about the business/earnings of the company during the
period?

2) Obtain the Balance sheet from the companies.

a) Do you notice any difference in the Total fixed assets when compared to
the previous year? If so, what is the difference? What does this mean for
the company?
b) Do you notice any difference in the Liabilities when compared to the
previous year? If so, what is the difference? What does this mean for the
company?
c) Do you notice any difference in the Capital and Reserves when
compared to the previous year? If so, what is the difference? What does
this mean for the company?

Assignment 1 (20%) (30 min)

Can be Pair work or individually done in class or completed at home

Write a short report of 500 words, commenting on the profit and loss account and the
balance sheets of these two companies over the past 3 years.
Assignment 2 (50%)

Look at the balance sheet of the two companies in Assignment 1.

a) Calculate the return on capital employed ratio for the two years.
b) Calculate the gearing ratio for the two years.
c) Using your results, write a short report on how good an investment the companies
are. (250 words each company)