Colombo Pharmacy PLC Ltd Accounting Essay

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This Report is based on understanding evaluation financial statements and how financial statements could be useful for stake holders. To analyze financial statements it has been explained how financial information can be useful for various stakeholders by taking internal and external stake holders. Moreover this assignment also explains certain standard that's implemented by SLAS, by analyzing Colombo pharmacy annual report whether the company has been in line with SLAS standard in their Annual report.

This assignment also consists of calculation of different ratios through annual report of Colombo pharmace, hence ratios has been commented on the ratios.

Introduction of Colombo Pharmacy Plc Ltd

Colombo Pharmacy plc is one of the oldest companies quoted in Colombo stock exchange. Was founded in 1913 in Colombo, srilanka. Colombo plc ltd is operates as a dispensing chemist and retail dealer in pharmaceuticals in Sri Lanka. Have had a very distinguished line of Directors who have

Served on the Board for over 95 years. In the 1990s we were privileged to enjoy a very cordial

And friendly working relationship with J. L. Morison Son & Jones (Ceylon) Ltd. They were

Represented on the Board to safeguard their investment of 24.16% of the issued share

Capital.

Company's Mission

"To provide an excellent and valuable service to customers and enhance the shareholders' value."

"To be the most dependable pharmacy that provides most professional and caring service at all times in srilanka."

Company's Vision

Part A

P 4.1 Purpose of publishing financial information and how it helps to various stake holders

Stake Holders are group of people who have interest in business organization. They can be classified as internal stake holders and external stake holders.

.

One of the most important purposes of publishing financial report is to shows the current financial data of the company and the amount that spend in company. Another purpose of publishing this report is to give information regarding finance position, finance percentage and change in finance position to the users who take decision on the basis of statement. Also other competitors and public will also get to know about company's financial analysis and it will keep memorizing them about company. Financial performance measured by profit & loss account. Cash flow statement will be found through change in financial positing. Balance sheet it will found about financial position. Purpose of publishing financial information is also opens the door to public. This helps many ways to stake holders. When look at some internal stake holders like manager; financial report helps managers to manage day to day activities and helps to take decisions easily. As financial information contains valuable information. When looks at customers; it helps them to get to know about the price of the product or service that provide by the firm and in the same time they can compare the price between competitors. This also helps customers to know more about company's turn over. Hence, customers have guarantee about the products that they were buying. When it comes external stake holders like government; government get to know whether the company is following their rules and regulation and they were paying tax in right way and can make ensure that they are not practicing any illegal activities and they get to knows whether they have any debt to pay. Suppliers; financial report helps supplier to get to know how much they provide to the firm and in future what are the change needed to be done in supplying process as well it helps them to understand their operation as they will get to knows how much money they are making in the company. Hence, it will be helpful them to knows clearly about demand of their products

P 4.2 Standards requested by SLAS on publish financial statement to what extend the select company has followed it in their publish financial report.

After analyzing annual report of Colombo pharmacy, founds that Annual report has been signed by director of Colombo pharmacy. Lalith Heengama and Mr. Gregory Scott. As it's one of Requirements of SLAS standard that, the directors/members of the governing body should sign financial statements which should also contains statement of responsibility (7A). Moreover

Company has also been in line with SLAS standard as; company annual report consist assets; liabilities; equity; income and expenses, including gains and losses; changes in equity; and cash flows. These things are found published in Annual report of Colombo pharmacy According to SLAS 3. In annual report also found that they have done their income statement as per standards of SLAS standards. Income statement of Colombo pharmacy have applied as per requirement of SLAS standard, Income statement includes tax expense, Revenue, profit or loss been done to SLAS standard (81). Moreover Annual report includes only information that relates only to company hence; it doesn't include other than information related to company. As it's one of the requirement in SLAS report (45). Under SLAS standard number 33, mentioned that It is important that assets and liabilities, and income and expenses, are reported separately. Offsetting in the income Statement or the balance sheet, except when offsetting reflects the substance of the transaction or other event. Company annual report has applied this and following to these standards of SLAS. So far analyzing the annual report it founds that Colombo pharmacy have been in line with the standards that required by SLAS. Some Standards of SLAS haven't been applied to their Annual report. Because it's not applicable to apply for a pharmaceutical company like Colombo pharmacy.

P 4.3

Solvency Ratio (Refer Appendix A.1)

Current Assets/Current Liabilities = 4.373701758 (Approximately 4.37)

Comment = Company's solvency ratio 4.37, Since the company has a ratio more than 2 the company is set to be solvent, that is company can pay its debts in the ordinary course of the business. That is good for the creditors and the company as well.

Profitability Ratio (Refer Appendix A.2)

Net Profit Before/Total sales Revenue *100

= 18.3 %

Gross profit/Total Sales Rev*100% (Refer Appendix A.2.1)

= 14.17

Comment = Net profit before tax is 18.3% of the total revenue of the company. The gross profit of the company is 14.17 % of the total sales revenue. That means company maintaining good profitability ratio. Since the company is earning companies profitable it's generally good for all the stakeholders.

Efficiency Ratio (Refer Appendix A.3)

Total Sales/Fixed Assets = 0.19 times

Comment = company's fixed assets ratio is 0.19 .that is company's total sales is 0.19 times of fixed assets. Company is fix assets turnover is almost 0.2, that means company sales are higher compared to company's noncurrent assets.

Investment Ratio (Refer Appendix A.4)

EPS (Earning Per Share)

P.A.O.S/ W.A. O. S = Rs 21.62

Comment = on average one ordinary share earns Rs 21.62. That is the company produces a net profit of 21.62 Rs. Per share. Since this is the healthy value company's good will in the market will be high. This is good for the company and all and it's stakeholders.

Conclusion

Appendix for MFRD Part A (Ratios)

Appendix A

Solvency Ratio (A.1)

Current Assets Ratio

Current assets = 110,441,922

Current Liabilities =25,251,361

Current Assets divided by Current Liabilities

= 4.373701758

(Approximately 4.37)

Profitability Ratio (A.2)

Net Profit Ratio

Net Profit before tax =25,465,590

Total Sales Revenue = 138,881,060

Net. Profit. Before tax divided by Total sales revenue

= 01833546624141947 *100

= 18.3 %

Gross Profit Ratio ( A.2.1)

Gross profit = 19,647,850

Total Sales Revenue = 138,881,060

Gross profit divided by Total Sales Revenue

= 1.415443057 *100% = 14.17

Efficiency Ratio (A.3)

Fixed Assets turnover ratio

Total Sales = 138,881,060

Fixed Assets = 730,803,564

Total Sales Divided by Fixed Assets = 0.19 times

Investment Ratio (A.4)

Earnings per Share

Profit Attributable to ordinary Shareholders = 27,513,400

Weighted Average Number Of Ordinary. Shares = 1,272,857

Profit Attribute to ordinary share Divided by Weighted Average Ordinary Shares

= Rs 21.62

Stake Holders are group of people who have interest in business organization. They can be classified as internal stake holders and external stake holders.

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