ACCT 20051/20077 Practical and Written Assessment

ACCT 20051/20077 Practical and Written Assessment

ACCT 20051/20077 Practical and Written Assessment

Question 1

A. Do you think Mr Brad Shelton should take the trip? Outline any ethical concerns involved

Had the trip been paid for by Brad’s organization the same would have presented no ethical issues but since the trip would be paid for by Pitt Ltd, Brad would be under a moral pressure of recommending their product. Hence if the trip is paid for by the client, it is advised not to take the trip.

B. Do you think the management of Software Solutions Ltd should allow Mr Brad Shelton to go on the trip? Justify your answer

The trip can be allowed by the management of the organizational concepts however the same should be paid for by the organization. This would ensure that the independence of Brad is not compromised and the best business judgment can be exercised.

C. Do you think that Software Solutions Ltd should have a code of conduct? What would be the advantages and disadvantages to Software Solutions Ltd of having a code of conduct?

For any organization a strong code of conduct is important as the same establishes the ground rules for the employees and the management of the organization. It is through a strong ethical code that the vision, mission and the culture of the organization is portrayed. The benefits of a code of conduct have been underlined below:

  • Code of conducts help an organization to improve its overall performance
  • The culture and the values of the organization are known to the employees
  • An agreed way of behaving is created (Smith, 1999)
  • Facilitates good communication with the employees especially during difficult times

The disadvantages of a code of conduct are as follows:

Generally code of conducts are drafted or implemented with the view of treating everyone equally however more often than not upper operations management officials and similar position holders are given a leeway on the same. This creates an environment of inequality. There are certain codes which can not be enforced taking into account the productivity of the employees and above all common sense. Quite often than not, researchers in this regards have found the codes to be instable. It has been witnessed in several cases that with a change in management the codes of the organization have also undergone a change (Code of conduct, 2010)

Question 2

A. What is meant by Greencross Ltd 'consolidated' Profit or loss (income) statement?

Consolidated financial statement refers to the financial statement of the group as a whole. A consolidated financial statement presents the financial results of all the organizations of the companies in the group as a whole. This enables the stakeholders to

B. The key statistical data is provided at the bottom of the income statement. For each item, summarise the change occurring between 2015 and 2016 and what this means for Greencross Ltd.

Item

2015

2016

Summery (what this means for Greencross Ltd)

% Change

% Change

Gross margin percentage

 95.6%

 15.5%

 The gross profit position of the organization has improved over the years which imply an increase in revenue and reduction in costs (ASX, 2016).

Operating expenses

23.8%

11.6%

This implies that the operating expense of the organization has reduced. This has improved the efficiency of the concern.

Revenue Growth

74.1%

13.8%

 The revenue of the organization has grown in the current year however the same has been lower than the % increase in the year 2015.

NPAT

117.5%

74.6%

 The net profit after tax of the organization has improved for the previous two years as in 2014 the organization had recorded a negative net profit or on other words loss. This implies that the financial performance of the organization is improving.

Finance cost

38.3%

17.7%

 The level of debt of the organization has increased which implies that the concern is becoming more leveraged.

Non-current assets

75.9%

6.4%

 The long term assets of the organization have increased as compared to the previous year.

Number of stores and veterinary clinics at the end of the year

35.0%

13.3%

 An increase in the number of stores year on year implies that the organization has been increasing its presence and affiliates (Greencross Limited, 2016).

Cash flow from operating activities

-0.39513

435.3%

 An increase in cash flow from operations implies that the efficiency of cash collection has improved which has also strengthened the overall cash position of the organization.

C. What is the purpose of providing two years of comparative figures for the financial statements (i.e. 2015 and 2016)? How would this information be useful to one of GreencrossLtd's shareholders? 

Comparative figures of the organization provide the user with a year on year analysis and enable them to understand if the performance of the concern has undergone a change in respect to the previous year or not. This helps to financial management  of change that has taken place. Providing comparative figures also enable to compare organizations of varied sizes. 

References

ASX,. (2016). Greencross Limited - ASX News. Greencrosslimited.com.au. Retrieved 25 November 2016, from http://www.greencrosslimited.com.au/Investor-Relations/ASX-News.aspx
Code of conduct. (2010) (1st ed.). [Darwin].
Greencross Limited,. (2016). Greencross Limited Investor Downloads. Greencrosslimited.com.au. Retrieved 25 November 2016, from http://www.greencrosslimited.com.au/Investor-Relations/Downloads.aspx.
Smith, K. (1999). Code of conduct (1st ed.). New York: Avon Eos Books.