Analyse the performance of a selected business, using information from its accounting systems, highlighting potential causes for concern.

Authors Avatar by ellouise1997hotmailcom (student)

Abscon Ltd owns a large TV and DVD player shop in Scotland. The company also has a servicing and repairs department. The Malcorn family, who own the business, decided to expand and open a new store in Coventry where they would lease premises in the shopping centre. Abscon Ltd would like to obtain a loan worth £100,000 to finance this development. I will write a report, highlighting their improvements made in their financial statements and also if there are any potential causes for concern. Abscon Ltd have made many improvements from 2013 to 2014, the most important improvements include:

Abscon Ltd.’s turnover. I see this as a vast improvement because it has improved by £200,000 from £1.3million in 2013 to £1.5million in 2014. This represents an increase of 15.38%. This shows that they have done very well at increasing their sales.

In addition, another important improvement is, their profit after taxation. This is a big improvement of £90,000 from a loss of £30,000 in 2013 to a profit of £60,000 in 2014. This is a big increase of 300%. This is a clear improvement as they began with a loss yet still made a profit of £60,000. In addition this figure is taken after they paid tax which means this is the profit they have to invest in other things, for example, going towards their expansion in Coventry.
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Furthermore, Abscon Ltd has £24,000 more in the bank than they did in the following year (2013). In 2013 they had £51,000 and in 2014 they had £75,000. This improvement means they can use this money to invest in expansion or they could save it for an emergency.

Despite Abscon Ltd making clear improvements there are also some causes of concern. I have identified the following things as causes for concerns:

Firstly, Abscon Ltd stock has increased over the two years by £30,000. In 2013 they had £60,000 worth of stock however in 2014 ...

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