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Essay Questions - Accounting

Accounting Essay Title: Using the information given in the scenario below, you are required to write a report recommending whether or not to invest in Hobart plc.

Your report should include the following:

  • An explanation of the main user groups and their needs (10%)
  • An explanation in general terms of key limitations of ratio analysis (15%)
  • Analysis of Hobart plc, including a recommendation, calculation of ratios (in an appendix, showing workings) and consideration of limitations which relate to the particular information in this case (55% including 10% for ratio calculations)
  • Presentation and style suitable for a report (including an executive summary, introduction, clear sections and a conclusion) (20%)

Hobart plc

You are given the following information:

  • Background information on the business and accounting policies of Hobart plc.
  • Accounts for Hobart plc for the two years ended 30 September 2006 and 2005.
  • Selected ratios and extracts from the accounts of Hobart plc for the three years 2004, 2003 and 2002.
  • Selected ratios and extracts from the accounts of Adelaide plc (a competitor business) for the two years ended 31 March 2006 and 2005. Adelaide re-values property assets and often acquires plant & equipment on finance leases.

Background information:

Hobart is a manufacturer of soft drinks, selling to pubs, restaurants and small supermarkets. It operates mainly in the UK which is considered a mature market. In recent years it has expanded in the UK by buying up smaller competitors. In 2006 it opened a new factory in Poland with a view to supplying Eastern Europe. Eastern European markets are seen as underdeveloped at present but are expected to grow following the expansion of the EU. Further expansion in Eastern Europe is planned for 2008.

Hobart has a policy of valuing non-current assets at cost. It often acquires non-current assets on operating leases. The current share price is 70 pence per share.

Harvard Style Referencing