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Analyse the accounts and investments statistics of OSU PLC and comment on the financial structure and current position of the company?

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Introduction

1. Analyse the accounts and investments statistics of OSU PLC and comment on the financial structure and current position of the company? Answer Ratio analysis is an important tool of financial analysis. The absolute accounting figures do not provide any meaningful information for the purposes of analysis of financial performance and financial position of the firm. But when two relevant accounting figures are co-related, this gives some meaningful understanding with regard to financial performance. Profitability ratio: These ratios are designed to highlight the end results of the business activity. They measure the operating efficiency or profit earning capacity of the company. Net operating profit ratio = net operating profit * 100 sales 2000 2001 2002 185/1600*100 = 11.56% 190/1800*100= 10.55% 150/1775*100= 8.45% Operating ratio = cost of goods sold + operating expenses/sale *100 2000 2001 2002 1415/1600*100= 88.43 1610/1800*100= 89.44 1625/1775*100= 91.55 Comments: As per calculations net profit ratio is falling every year and this declining trend is showing companies less capacity too bear any fall in sales it may happen also due to expenses related to sales have been increasing also the operating ratio is increasing. As per the investment statistics of the osu plc share price is falling i.e. From rs.230/- in year 2001 to rs.85/- in year 2002.low share price means less credit worthiness of the company in the market and again it will lead to less investment in shares, less availability of funds, more of borrowed funds, more risk involved in business. So current status of the company is more risk involved, as debts are more than the shareholders funds. And also liquidity position is also not so good, net profit is decreasing, working capital is nil, and costs are increasing. So company is facing financial distress. 2. Liquidity ratios: These ratios measure the ability of the firm to meets it short term obligations and reflect the short-term financial strength. It indicates the capacity of the business to pay its current liabilities as when they fall due for payment. ...read more.

Middle

This basis should be disclosed. F) An increase in the net book value arising on revaluation of fixed assets should be credited directly to owner's interest under the head of revaluation reserved. These items are important and not contained in the accounts and which are influential in financial decision-making. 3) Drawing from the theories underpinning dividend to support your arguments, examine the effects of the pattern of dividend payments by Osu Plc over the past three years? Answer The basic Dividend Theories are: Traditional View: Dividend policy is important for shareholders. Shareholder might prefer to receive its benefit today rather than to have it reinvested in the business even though it might yield in the future benefits or dividend. The reason behind this is the certainty of future dividend is less. Dividend Irrelevancy: Nothing that the company does in the way of paying or not paying a dividend has any effect upon the shareholders' wealth. There is no optimal dividend policy and that the reason that manager need not worry to find it. This means shareholders wealth is the regardless of the decision the company makes about dividend. Dividend signalling theory: An unexpected change in dividend is regarded as a sign of how the director views the future earning prospects of firm. Generally, arise in dividend payment is viewed as positive signal, conveying positive in formations about the firms future prospects resulting in the rise in share price. Conversely reduction in dividend payment is viewed as negative signal, resulting in decrease in share price. The bird-in the-hand theory -- (Lintner, 1962; Gordon, 1963) Shareholders are risk averse. They prefer to receive dividend at present then in future because present dividends are actual cash. The latter is based on future dividend, which is yet to be received. Gordon contended that the payment of current dividends resolves investor. (Source: Module Handbook) Dividend Policy of OSU Plc Dividend policy play an important in the financial dividends and share holders are the one who are liable to get benefits from it, so it's important that dividend should favour to them. ...read more.

Conclusion

makes an order for the winding up of the company it shall forthwith cause intimation to be sent to the official liquidator and registrar of the order of winding up. Copy of winding up order to be filed with registrar: On the making of winding of order, it shall be the duty of the petitioner of the company to file with the registrar within 30 days of certified copy of the order. Order of winding up deemed to be notice of discharge: The order for winding up shall be deemed to be notice of discharge to the officers and employees of the company. Whereas the servant of the company is on contract basis on a fixed term and the term has not expired. The order operates as a wrongful discharge and the damages are allowed for breach of contract of service. Suits stayed: When the winding up order has been made, no suit or other legal proceedings shall be commenced against the company except by the leave of the court. Similarly pending suits shall not be preceded apart from leave of court. Powers of court: The court, which is winding up the company, shall have Jurisdiction to entertain or dispose of Any sue or proceedings by or against the company. Any claim made by or against the company. Any application made for compromise with creditors and /or members. Any question of priorities or any other question what so ever, whether Of Law oe fact, which may relate to arise in course of the winding up of The Company Effect of winding up order: An order of winding up the company shall operate in favour of all the creditors and of all the contributories of the company as if it had been made on the joint petition of a creditor and a contributory. Official liquidator to be liquidator: On the winding up order being made in respect of the company, the official liquidator shall, by virtue of his office become the liquidator of the company. ...read more.

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