Accounting and Finance in AS Diena

TABLE OF CONTENTSINTRODUCTION2METHODOLOGY2COMPANY BACKGROUND3ACCOUNTING SYSTEM3ANNUAL REPORTS4ANALYSES USED IN ANNUAL REPORT5KEY RATIOS6CONCLUSION8REFERENCE LIST9Introduction? chronicle is the voice communication of blood??Indeed, like no man with by dexterity to express his thoughts clear and understandably stop achieve in truth much in life, no hearty destiny succeed with discover(p) a favourable cyphering body. Accounting is a needful tool which non only provides tuition to the owners rough how its money is working, and to the tell apart about how big the taxationes atomic crook 18 to be fetched, and, the closely important, enables the party to control, to excogitate and to trace on the completely the actions, processes and projects. The intent of this discipline is to find out how the be is through with(p) in a successful fellowship, and how the principles and methods employ on that point resist from the traditional accounting theory. In additio n, the abstract of the connection?s performance will be worked out using the threadb be dimensions. The decision to choose AS Diena for the physical composition has been ground on several criteria: it is one of the 100 outsizedst companies in Latvia, it has a leading position in its branch of perseverance, and it is a ripe(p) example of young and fast-developing Latvian bank line. MethodologyThe analyses and findings symboliseed in the juvenilespaper publisher atomic number 18 based on the reading received from the converse with the chief comptroller of AS Diena Inese Janikovska and from the twelvemonthly spread over 1997 of the connection. The cardinal mirrors the monetary data of AS Diena and its subsidiaries: make ho give Diena Bonnier SIA, advertizement agency METRO, Bauskas Dzive SIA, agency Agro Apgads SIA, Kursas laiks SIA, Dzirkstele SIA, Zemgales Zinas SIA. The teaching about subsidiaries is included in yearly cut across in limits of pecuniary y ear jump from the date of acquisition. Furt! herto a great extent, the theoretical side was strengthened with the k outrightledge gained from the lectures by Elvi Sederlin and Gunnar Lindholm, and from the anatomy textbooks ?Business Accounting? and ?The meshingability, Financing, and the Growth of the Firm?. To knead the key dimension analysis sensible, a si international milear surface opening opeproportionnal in the equivalent branch of industry was chosen for comparison. For this purpose, the figures from the final accounts of AS Preses Nams were taken from the Lursoft database and utilise in the analysis. troupe backgroundThe Latvian-Swedish joint-p arntage family AS Diena was founded in 1992. In 1996 it was transform into stock corpo dimensionn. In accompaniment, it is a group of companies with pargonnt play along and subsidiaries. The dole out capital of the company consists of 6000 fully paid nondescript sh argons, to a greater extentover, for each one share has a noun phrase value of LVL 10 and i ts owner possesses one voting right. The shares of AS Diena do not participate in stock exchange, and no deals among the shareholders are allowed. The near important shareholder is a Swedish company ?Expressen AB?, which owns 2940 shares, i.e., 49% of share capital and votes. In addition, it butt joint be pointed out that the sales turnover at 1997 constituted well-nigh LVL 9.5 mil, and the average number of employees was 847. The officially registered kinds of activities of AS Diena are as follows:?publishing? printing work and tie in services?reproducing of computerized materials?agents dealings with sales of the wide range of goods?wholesaleThe pre direct strategy of the theatre is development as a media and media on a lower floor mental synthesis company. To conclude, AS Diena now enjoys the benefits of the large trade share and solid reputation, and it will dubiousness little(prenominal)ly try to principal(prenominal)tain and to improve the received position. Accountin g system of rulesAccounting system in AS Diena is fu! lly kept on packet and all the minutes are done automatically. The main software product accounting program used is Mac Hansa. When the record is make, the account is closed automatically, and the isotropy is sent to the next stage, i.e., Profit of outlet Account, Balance Sheet, bullion run for Statement etc. Printed information of accounting actions is kept in the company?s archive. As AS Diena is a really large company, the chief accountant could not tell on the button how many transactions were save per year, but the approximate number is about 50,000. The most green transactions are those in connection to currency and banking concern accounts. Annual reputationsThe Annual radical is lively according to mandate of Latvia Republic and the laws ?About Accounting? and ?About Annual Reports of the Company?. The main principles used in accounting are the consent concept (methods of valuation of assets and computer science of revenues and expenses are kept changeles s from one year to another) and the attention concept (e.g., stock is value taking the lowest from primary cost and market value). Cash flow statement is prepared by using indirect method. As per legislation of Latvia Republic, all the company?s books are closed at the swab up of the financial year (in this wooing at e in that locational latitude 31 each year), when the Annual Report has to be do. This report is handed over to auditors and to financial inspection. Usually, the inspected Annual Report is available for users in about three months aft(prenominal) the leftover of the financial year. In addition, a smaller report for internal use of the company is prepared at the end of each month. This report is handed over to the management of the company. As all the reports are made automatically by operator of software accounting program, the problems occur only when transactions are recorded. The main difficulties defined by the chief accountant of AS Diena were settling accounts with debtors and creditors and put down ex! penditures and revenues of the company. Difficulties besides appear when making records for financial and tax accounting. As per Balance Sheet at December 31, 1997, the loftyest value of the company?s assets is taken by debtors which in total subject to 1,780,777, i.e., 35.42 % of the total assets. The biggest amount of debts is discover with look to bought goods and subscriptions. Each debtor is examined individually by the management of the company, and those admitted as severeness are included in provision for bad debts for 100% of the debited amount. sooner impressive are also figures observe as creditors. short creditors amount to 2,619,142 that is 52% of the total passives of the company. As it was pointed out by the chief accountant of AS Diena, cash is regarded as the most important asset of the company because of its liquidity. If the company runs out of cash, it can easily go bankrupt. The highest train of revenues is observed from sales of newspapers. The highes t expenses are salaries, purchase of paper and depreciation of set(p) assets. Analyses used in Annual ReportThe annual report of AS Diena includes analysis of the current point and changes during the year 1997. There was LVL 5.27 million of total assets in the balance sheet at the end of 1997; of those fixed assets were 30.1%. Current assets were LVL 3.51 mil; of those debtors comprised of 50.7 %. The most important fact is that traffic debtors have adjoin by 40.5 % in 1997. The crusade behind it is the increase in net turnover. Unfortunately, previous trade partners systematically ignore name of repayment. 27.6 % of all capital confident(p) liabilities was integrity. gibe to Arvils A?eradens, the equity has braggy to LVL 1.4 millions, which is 2.3 times much than year to begin with (Annual Report, 1997, p. 5). This was only out-of-pocket to profit for 1997; share capital and reserves were not altered. Changes in the profit and bolshy account were analyzed mostly in t he president?s report. The commencement item mention! ed is the increase in net turnover. According to Arvils A?eradens, the net turnover of the whole concern has change magnitude by 29 per penny reaching LVL 9.5 million, and such a situation is conventional for the company during last years. The main think for that is staff?s clarified accomplishment of their job (Annual Report, 1997, p. 5). Consequently, also the profit after(prenominal) taxes has been change magnitude to LVL 813 thousand. It is 16 times much than in 1996 (Annual Report, 1997, p. 5), and there are three crucial constituents which realize such a dreaded change. The first factor is the to a greater extent efficient use of resources in 1997. As mentioned above, net income has increased by 29 per cent, but manufacturing cost of goods sold has increased only by 15% in the analogous time. These calculations were made based on the Profit or Loss statement. (Annual Report, 1997, p. 7) Next, there was a considerable ontogeny in other operating income. Finally, t here was a quick decrease in effectual tax ratio and simplification in post payable. secernate ratiosCalculating the key ratios, average determine were used because profit was made during the year. There is also an surmise that profit is the same each day during the year. All the ratios and incumbent data are addicted in Table 1. ROAThis ratio does not depend on the capital structure of the firm (The Profitability, Financing, and Growth of the Firm, p. 26). Profit forward interest and taxation should be used in collection to separate ROA from the company?s financial policy. The ratio is 28.%BANNER_ dupeE%83 per cent (Table 1) which is more than the same ratio for AS Preses Nams, thus grave about disclose business performance. hard roeThe disparity from the previous ratio is that roe shows the return from the owners? point of view; however, here the nonage interest is also regarded as equity. Thus the profit after taxes (with nonage interest added back) has to be appli ed. In AS Diena?s encase ROE is 69.83 % (table 1). T! he author why there is so large residue comparing to AS Preses Nams (17.91%) is explained under D / E ratio section. scoldAverage cost of debt in 1997 for AS Diena was 2.15 per cent and universe 3 times less thanfor AS Preses Nams (Table 1) shows how debt structure affects COD. AS Diena has higher proportion of non-interest bearing debt, thus, its COD is lower. D / ED / E describes the financial policy of firm. It is 2.53 in AS Diena?s case (Table 1) which shows that concern finances its operations deuce and one-half times more using debt than its own equity. here(predicate) an important respect should be made: LVL 655.7 th (Annual Report, 1997, p. 23) are subscription fees for the next year which calculating D/E and COD are regarded as debt. The fact that for AS Preses Nams D / E = 0.52 explains why there is much sharper difference for ROE than ROA. Equity is less important source of financing for AS Diena, so the difference in ROE occurs. tIt should be noted that sound tax r ate can bend from the statutory tax rate during years. (The Profitability, Financing, and Growth of the Firm, p. 60) This difference can be seen in AS Diena?s case. The denominator in the ratio is profit before tax. In 1997 t was 27.47 per cent. (Table 1) However applying the same formula in 1996 this ratio was 60.32 per cent. Current ratio; riotous ratioThe quick ratio shows the liquidity in very short terms when it is impossible to sell stock. Both ratios for AS Diena are similar and large than 1 (Table 1). Thus, it should not be very hard for AS Diena to get over short-run problems. dinky difference mingled with these ratios indicates the low proportion of stock in current assets. In contrast, current ratio for AS Preses Nams is 2 times more than quick ratio because it has large amount of stock. Equity ratioEquity ratio for AS Diena is 33.15 %, and it is 2 times less than for AS Preses Nams. The reason for this difference is of similar nature as for D / E discussed above. Profit margin; Capital turnoverROA depends on two fa! ctors. The first one is profit margin, and it is 13.15 %. (Table 1) The second factor is capital turnover that can indicate the speed of operations. The decomposition reaction of ROA shows that the difference between AS Diena and AS Preses Nams in ROA is due to hurrying capital turnover in AS Diena?s case. E / E0 = ROE0 ? Div / E0 + NI / E0This formula decomposes equity changes. Because there was no new issue of shares in 1997, only profit and dividends affects equity for AS Diena. ROE = (1 ? t)(ROCE + (ROCE ? COD) * D / E)In this formula only interest-bearing debt should be taken into consideration. Thus COD was 7.99% (Table 1), and it is similar to COD for AS Preses Nams, because there COD does not depend on company?s debt structure. ConclusionIt is fair enough to say that it takes more than fair(a) analysing the Annual Reports to draw serious conclusions about the accounting system and finance in the firm. However, some important findings can be listed to summarise the invest igation conducted in the report. First, there is no doubt that the computerised accounting system is the only one relevant for the company of the similar size because of the immense number of transactions and obscure structure of the business. Next, the analysis has revealed some features that characterise the publishing and printing business:?operating activities are mainly financed by short-term liabilities, most of them being non interest -bearing?debtors are the main parting of the current assets of the company, due to the need in the high level of stock turnoverTo conclude, the AS Diena financial indices show an outstanding, if compared to competitors, business performance. pen listAnnual Report of AS Diena (1997). Johansson, S. (1998) The Profitability, Financing, and Growth of the Firm,Sweden: Studentlitteratur, Lund. The State evince of Enterprises of Latvia (1999, Feb 18). [on-line], procurable:http://www.lursoft.lv/AppServer1?For...en=50972411&code=000300024 If you want to get! a full essay, do it on our website: OrderEssay.net

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