Guides on A2

For LO2 and LO3, you should submit a business letter to your client (Link’s Restaurant) addressing
the requirements given in the assignment brief.
The word count of the letter is 2,000–2,500 words, although you will not be penalised for going
under or exceeding the total word limit. A bibliography should be provided using the Harvard
referencing system
For LO2:
To achieve P3, M2, your work should:
P3 Prepare financial statements from a given trial balance for Link’s Restaurant
- Prepare the adjusted trial balance
- Prepare the financial statements, including the Income statement, Statement of financial
position for Link’s Restaurant at 31/12/2023
M2 Prepare adjusting entries for Link’s Restaurant at 31/12/2022
For LO3:
To achieve P4, P5, M3, D2, your work should:
P4 Calculate and present financial ratios for Link’s Restaurant over 3 years and DXG over 5 years
Ratios analysis: main ratios include
1. Profitability
ROA, ROE, Gross profit margin, Net profit margin
2. Liquidity
Current ratio, quick ratio, Debt ratio, Interest coverage ratio
3. Asset usage
Total assets turnover (sales/total assets), fixed asset turnover (sales/non-current assets),
Returns on capital employed
AR turnover, AR days, Inventory turnover, Inventory days
4. Investment ratio
EPS, P/E, dividend coverage, dividend yield (DXG)
Present the ratios in tables with proper headings
P5
Compare the performance of Link’s Restaurant over 3 years
Compare the performance of DXG over 5 years using financial ratios.
M3
- Evaluate the performance of Link’s Restaurant and DXG over time, using financial ratios
with reference to industry peers
- Discuss the benefits of using accounting software packages for Link’s Restaurant, with
examples of products in the market
D2
- Critically evaluate DXG’s performance using ratios, trend analysis, component percentage,
comparing with industry peers… considering economic environment, industry performance,
firm’s specific business activities and plans
 - Make conclusions and recommendations (about the company performance, recommendations
to improve performance, short recommendation to use accounting softwares…)
For LO3 (P4, P5, M3), you should calculate and discuss the ratios of Link’s Restaurant and DXG
separately. Remember to use the format of a business letter with proper headings, tables…

You should submit to LMS:

1. A2 report in the form of the letter to Link’s Restaurant management (complied using
Microsoft Word), making sure that you use a standard cover page for your assignment.
2. Excel spread sheets for all ratios calculation (LO3) and financial statements, trial balance
(LO2)