MFRD FINANCIAL DECISIONS ASSIGNMENT

TASK 1: FINANCIAL DECISIONS BASED ON FINANCIAL INFORMATION Outcome 3.1: Budgets and making appropriate decisions 3.1a Flexible budget and budgetary control: variance analysis Flexible budget (also called a variable budget) is based on predicted amounts of revenue and expenses corresponding to actual level of output It show differences between actual performance and budgeted performance based on actual volume or other level of activity to identify reasons for any differences (John, 2009) My F05 Ltd manufactures a distinction product Budget results and actual results for June 2011 are shown below Budget 4,000 Production (units) Actual results 6,000 £ £ Direct materials Direct labour Maintenance Depreciation Rent and rates Other costs Total cost 12,000 8,000 2,000 4,000 3,000 9,500 38,500 10,500 8,500 2,500 4,500 3,500 5,000 34,500 Variance 2,000 £ (1,500) 500 500 500 500 (4,500) (4,000) a) Budget Plan output of My F05 Ltd is 4,000 units and standard cost units: Direct materials £3.00/unit, Labor £2.00/hr Therefore, direct material is 4,000 x £3.00 = 12,000 and direct labor is 4,000 x £2.00 = 8,000 Standard cost includes maintenance: £2,000; depreciation: £4,000; and rent and rates: £3,000 Other cost consists of fixed costs of 1,500 plus a variable cost of £2 Thus, other costs is 1,500 + (4,000 x £2) = 9,500 b) Actual results According to data from scenario: Production units - £6,000; Direct Materials - £10,500; Direct Labor - £8,500; Maintenance - £2,500; Depreciation - £4,500; Rent and rates - £3,500; Other costs - £5,000 c) Variance Variance is calculated by formula: Variance = Actual result - Budget As can be seen, the difference between the projected budget and the actual performance In this case variance is negative, meaning the budgeted amount was greater than the actual amount spent Budgetary control is the practice of establishing budgets which identify areas of responsibility for individual managers (for example production managers, purchasing managers and so on) and of regularly comparing actual results against expected results, the differences being variances (John, 2009) The budgetary control (variance) analysis should be as follows Production (units) Variable cost Direct materials Direct labour Maintenance Semi-variable cost Other costs Fixed cost Depreciation Rent and rates Total cost Fixed budget (a) 4,000 £ Flexible budget (b) 6,000 £ Actual result (c) 6,000 £ Budget variance (b) – (c) 12,000 8,000 2,000 18,000 12,000 3,000 10,500 8,500 2,500 7,500(F) 3,500(F) 500(F) 9,500 13,500 5,000 8,500(F) 4,000 3,000 38,500 4,000 3,000 53,500 4,500 3,500 34,500 500(A) 500(A) 19,000(F) £ Notes: (F) denotes a favourable variance (where less than expected was spent) and (A) an adverse or unfavouable variance (where more than expected spent) a) Flexible budget: (Actual production / Expected production) x variable (semi-variable) cost in fixed budget Direct material: (6,000/4,000) x 12,000 = 18,000 Direct labour: (6,000/4,000) x 8,000 = 12,000 Maintenance: (6,000/4,000) x 2,000 = 3,000 Other costs: (6,000/4,000) x 6,000 = 13,500 b) Budget variance: Budget variance equal flexible budget minus actual result Decision making Actual cost for 6000 units is £34,500 Fixed budget for 4000 units is £38,500  Budget and actual costs is differ from each other too large  it is good for setting up estimation If flexible is too high, it will make to decrease competitiveness of business  The company should consider again about production unit cost  Give right prices for buying products into market to increase competitive advantages Other costs of the company is not good, standard is not correct, difference of 7,500  it is not good for price decisions  The company also need consider again them The most important method of budgetary control is variance analysis, which in this context involves the comparison of actual results achieved during a control period with a flexible budget Variance analysis In producing 6000 units the expected costs should have been, not the fixed budget costs of £38,500 but the flexible budget costs of £53,500 Instead, the actual costs were 34,500 and £4,000 less than company’s expectation The reason for improvement is when produce 6,000 units the cost were lower than what we expected (BPP, 2004) Variable cost should have been greater than the £22,000 in the fixed budget because the company produced 6,000 units instead of 4,000 units Costs should have increase by ½ (12,000 + 8,000 + 2,000) = £11,000 which can budgeted as the variable cost of 2,000 units This is difference between the fixed and flexible budgets Semi-variable costs should have risen by £4,000 for the increase of production (BPP, 2004) A full variance analysis statement would be as follow £ Fixed budget costs Budgeted difference due to increased production level (£11,000 + £4,750) Flexible budget cost Variances Direct materials cost Direct labour cost Maintenance cost Other costs Depreciation Rent and rates £ 38,500 15,750 54,250 7,500(F) 3,500(F) 500(F) 9,250(F) 500(A) 500(A) 19,750 (F) 34,500 Actual costs Such as statement could be prepared by the accountant and then circulated to senior management and operational management in the periodically-prepared budgetary control report Operational management may then be asked to investigate the reason for large variances so that they can decide whether a corrective action is necessary 3.1b The summary of the possible cause of variance a) Material price - Material price increase due to inflation are raising, meaning that no matter the price for raw material will steadily increase - Interest rate increase from loaning so the suppliers increase the material price to recoup the losses - Changing material standard such as: add some new material - Changes in transportation costs lead to the material price increase b) Material usage - Material usage rate increase, for example the firm has some problem about the machinery lead to large qualities of product is destroy totally - Material is defective so the firms need other material sources instead - The firm needs many materials in order to produce large products for the partners c) Labor rate - The company must pay more salary, have welfare policies such as bonus, reward for their worker to motivate and encourage them contribute their best for the company’s objective - Rate increased resulted in increase of actual direct labor cost, for example, excess overtime, the worker is pay more money for their efforts d) Idle time - All operation of firms is stopped due to machine breakdown or non-available of material - Worker is injury in work process lead to the shortage of labor resources Outcome 3.2 Unit costs and makes pricing decisions using relevant information 3.2a Specification of F05 Ltd items Specify items for My F05 Ltd items of expenditure which are classified as direct material cost, direct labor, and production overhead and so on (Scenario, 2012) a) Direct costs • Direct material costs: timber, bamboo (raw material); and cartons, boxes (primary material) • Direct labor costs: salary, bonus, reward for carpenter, designer and employees • Direct expenses: salaries expenses, factory expenses… b) Indirect cots • Production overheads - Indirect material: glues, screws, glasses… - Indirect wages: wage for stores staff, and foreman - Indirect expenses: rent, rate and insurances • Administration overheads: telephone, internet, legal charges, and audit fee… • Selling overheads: advertising costs, and market research, website maintains costs • Distribution overheads: warehousing, and delivery vehicles… 3.2b Decision making In the case of F05 Ltd, it has many costs affect the decision making of company but below is some kinds of cost that may be used in the decision making of F05 Ltd Pricing per unit = 54,500/6,000 = 9.083 Cost payment = 34,500/6,000 = 5.75 Cost according to budget = 38,500/4,000 = 9.625 If company has large different between budget and actual, it will not good for company But if budget similar to actual, company will prepare good sources for produce such as human sources, financial sources, material sources and so on It helps company save money and avoidable the waste of sources in company In addition, company should care about standard unit cost to have the best decision making If the budget is too high, products of company will have high price in market As a result, it make product of company decrease competitive advantages when compare with other competitors and company will not sell product TASK 2: INVESTMENT AND PROJECT APPRAISAL Outcome 3.3 Assess the viability of a project using investment appraisal techniques 3.3a The average rate of return for each project Estimated average profit x 100% ARR = Investment According to data in scenario: Project A Year Income from operations Project B Net Cash Flow £ £ Income from Operations £ Net Cash Flow £ 6,000 22,000 13,000 29,000 9,000 25,000 10,000 26,000 10,000 26,000 8,000 24,000 8,000 24,000 8,000 24,000 11,000 27,000 3,000 19,000 44,000 124,000 42,000 122,000 Total Investment (in the start of project) + Investment (in the end of project) Investment = 80,000 + = = £40,000 Project A 44,000 : ARR A = = 0.22 40,000 The total profit of project A in year is total income from operations so the profit of project A in year is £44,000 Therefore the Estimated average profit = total profit/5 = 44,000/5 = £8,800 Investment of project A in the start of project is £80,000 and they use straight-line depreciation will be used and no residual value is expected so the investment in the end of project is £0 Therefore, Investment = (80,000 + 0)/2 = £40,000 Project B ARR B = 42,000/5 = 0.21 40,000 The total profit of project B in year is total income from operations so the profit of project A in year is £42,000 Therefore the Estimated average profit = total profit/5 = 42,000/5 = £8,400 Investment of project B in the start of project is £80,000 and they use straight-line depreciation will be used and no residual value is expected so the investment in the end of project is £0 Therefore, Investment = (80,000 + 0)/2 = £40,000 Compare the average rate of return of project A and project B: ARR A = 0.22 ARR B = 0.21  ARR A > ARR B  Company should choose project A 3.3b The net present value for each project The value of money in the future FV t = PV FV t: the value of money in year t PV: the value of money in present r: the interest  PV = Present value of cash flow in the future PV = Net PV = – C0 (C0 is the money invest when start project) Project A: The present value of cash flow in the next year PV = = £19,140 The present value of cash flow in the next year PV = = £18,900 The present value of cash flow in the next year PV = = £17,108 The present value of cash flow in the next year PV = = £13,728 The present value of cash flow in the next year PV = = £13,419 Net PV = – C0 = (19,140 + 18,900 + 17,108 + 13,728 + 13,419) – 80,000 = £2,295 Project B: The present value of cash flow in the next year PV = = £25,230 The present value of cash flow in the next year PV = = £19,656 The present value of cash flow in the next year PV = = £15,792 The present value of cash flow in the next year PV = = £13,728 The present value of cash flow in the next year PV = = £9,334 Net PV = – C0 = (25,230+ 19,656+ 15,792 + 13,728 + 9,334) – 80,000 = £3,740 Both projects have Net PV > so company can accept both two projects TASK 3: FINANCIAL PERFORMACE OF A BUSINESS Outcome 4.1 Main financial statements Financial statements are a collection of reports about an organization's financial results and condition (Accoutingtools, 2012) There are main financial statements: balance sheet, income statement, and cash flow a) Balance sheet: • Purpose: A balance sheet prepares to show assets, liabilities, and owners’ or stockholders’ equity A balance sheet is a snapshot of a business’ financial condition at a specific moment in time, usually at the close of an accounting period • The balance sheet is based on the following fundamental accounting model: Assets = Liabilities + Equity - Assets and liabilities are divided into short-term and long-term obligation including cash accounts such as checking, money market, or government securities + Assets will be land and buildings, fixtures and fittings, property + Liabilities are loans from bank or other sources - Equity is retained earnings from past contract to provide carpet b) Income statement • Purpose: An income statement is a summary of a company’s profit or loss during any one given period of time, such as a month, three months, or one year The income statement records all revenues for a business during this given period, as well as the operating expenses for the business • The simplest equation to describe income is: Net Income = Revenue - Expenses - Revenue is all money that received from business contracts of organization - Expenses include outflows incurred to produce revenue, such as salaries expenses, water expenses, electricity expenses… 10 c) Statement of cash flows: • Purpose: Cash flow statements explains differences between profit and cash and also show where a business gets its capital from and what uses it puts the capital to Only large companies are required to produce a cash flow statement, though smaller companies can so if they wish • The statement of cash flow is separate into three sections: - Cash Flows from operating activities: is a section of the cash flow statement that provides information regarding the cash-generating abilities of a company's core activities - Cash Flows from Investing Activities: represent the net change in cash from the use or sale of income-generating assets - Cash Flows from Financing Activities: reported on the statement of cash flows (SCF) involve changes to the long-term liabilities and stockholders’ equity (sections of the balance sheet) during the period shown in the heading of SCF Outcome 4.2 Financial statements for different types of business There are type of business: sole trade, partnership and company; the table below shows the differentiation of financial statement in different type of business Balance sheet Sole trader Partnership The profits (or losses) each year are often transferred into the capital account The partners’ individual stake in the business is represented by capital account (use for their long-term investment) and sometime, current account (use to record profit share, drawing, salaries, interest on capital account) 11 Limited liability company The owner are shareholder, whose initial stake is shown as share capital and subsequent profits earned shown as a balance on the profit on loss account A sole trader would prepare a simple profit and loss account Income statement Cash flows from operating activities, from trading activities of a business Statement of cash flow The interest must be paid before profit and divided among the partner and is included in the income statement as allocation of net income Cash received from investment activities such as capital and paid on loans Company will have to prepare based on International Financial Reporting Standards or Generally accepted accounting principles Same as sole trader, cash flow from all operating activities a) Balance sheet Sole trader: The profits (or losses) each year are often transferred into the capital account Partnership: The partners’ individual stake in the business is represented by capital account (use for their long-term investment) and sometime, current account (use to record profit share, drawing, salaries, interest on capital account) Limited liability company: The owners are shareholder, whose initial stake is shown as share capital and subsequent profits earned shown as a balance on the profit on loss account b) Income statement Sole trader: A sole trader would prepare a simple profit and loss account Personal income tax Partnership: The interest must be paid before profit and divided among the partner and is included in the income statement as allocation of net income Interest on capital and Life-Policy Premiums Limited liability: Company will have to prepare based on International Financial Reporting Standards or generally accepted accounting principles 12 Salary expenses, corporation tax, and insurance c) Statement of cash flow Sole trader: Cash flows from operating activities, from trading activities of a business Partnership: Cash received from investment activities such as capital and paid on loans Limited liability: Same as sole trader, cash flow from all operating activities Outcome 4.3 Financial statements using appropriate ratios and comparisons both internal and external Financial ratios are useful indicators of a firm’s performance and financial situation Most ratios can be calculated from information provided by the financial statements Financial ratios can be used to analyze trends and to compare the firm’s financials to those of other firms In some cases, ratio analysis can predict future bankruptcy (John, 2009) 4.3a Profitability and return on capital 1) Profitability Ratios The most important profitability ratio is therefore return on capital employed (ROCE), which states the profits as a percentage of the amount of capital employed (Anon, 2004) Profit before interest + Interest payable (PBIT) ROCE = Capital employed Capital employed = Share capital + Reserves + Non - current liabilities According to income statement of BAT: • • Profit before interest: £4,931 (2011), £4,388 (2010), £4,080 (2009) Interest payable: £567 (2011), £583 (2010), £602 (2009)  PBIT is calculated as follows 2011: £ (4,931 + 567) = £5,500 2010: £ (4,388 + 583) = £4,971 2009: £ (4,080 + 602) = £4,682 According to balance sheet of BAT: 13 • • • Share capital: £ 506 (2011), £506 (2010), £506 (2011) Reserves: £5,025 (2011), £5,510 (2010), £4,939 (2011) Non-current liabilities: £10,798 (2011), £10,667 (2010), £11,786 (2009)  Capital employed is calculated as follows: 2011: £ (506 + 5,025 + 10,798) = £ 16,329 2010: £ (506 + 5,510 + 10,667) = £16,683 2009: £ (506 + 4,939 + 11,786) = £17,231 2011 5,500 16,329 = 33,68% ROCE 2010 4,971 16,683 = 29,89% 2009 4,682 17,231 = 27,17% As can be seen, ROCE of the company is quite high, and increased steadily in years from 2009 to 2011 It proved that the company is operating very well and earned more profits 2) Profit margin and asset turnover: PBIT Profit margin = Sales Sales Asset turnover = Capital employed 3) Gross profit margin 4.3b Borrowing 1) Liabilities ratio The liabilities ratio is the ratio of a company’s total liabilities to its total assets - Assets consists of fixed assets at their balance sheet value, plus current assets - Liabilities consist of all creditors, whether amounts falling due within one year or after more than one year (Anon, 2004) Total debts Liabilities ratio = Current liabilities + non-current liabilities = Total assets Total assets 14 According to Balance Sheet in annual report of British American Tobacco 2011, the current liabilities of company are £7,847, including borrowings, income tax payable, other provisions for liabilities and charges…The non-current liabilities are £10,798, including borrowings, retirement benefit liabilities, deferred tax liabilities…Therefore, the total debts are £18,645 In addition, the total assets are £27,119 (including the current assets are £8,495 and non-current assets are £18,624) Similar to 2011, the total debts of 2010 are £18,312 (including current liabilities are £7,645 and non-current liabilities are £10,667), and the total assets are £27,860 (including current assets £8,657 and non-current assets - £19,203) Accordingly, in 2009 the total debts are £18,702 (including current liabilities - £6,916 and noncurrent liabilities - £11,786), and the total assets are £26,614 (including current assets - £8,106 and non-current assets - £18,508) From the data above, in the case of BAT the liabilities ratio is as follows Total debts Total assets 2011 18,645 27,119 = 2010 18,312 27,860 = 2009 18,702 26,614 = 68,75% 68,18% 70,27% In this case, the liabilities ratio is quite high, mainly because of the large amount of current liabilities The ratio has fallen from 70,27% to 65,86% between 2009 and 2010 despite of having increased but slightly only about 0,57% in 2011 Therefore, the company appears to be improving its positions 2) Interest cover 4.3c Liquidity and working capital ratios 1) Quick ratio 2) Current ratio 3) Efficiency ratio • Debtor days • Stock turnover period • Creditors’ turnover 4.3d Shareholder’ investment ratio 15 Earnings per share (EPS) Hoàn chình nốt phần thiếu ……… APPENDIX Cho thêm bảng vô hen…………….Đánh lại số appendix Appendix 1: The income statement of British American Tobacco British American Tobacco Group Income Statement For the year ended 31 December Note s 2011 2010 2009 £m £m £m Gross turnover (including duty, excise and other taxes of £30,724 million (2010: £28,972 million)) Revenue Raw materials and consumables used Changes in inventories of finished goods and work in progress Employee benefit costs Depreciation, amortization and impairment costs Other operating income Other operating expenses Profit from operations Analyzed as: – Adjusted profit from operations – Restructuring and integration costs 16 3(a) 3(b) 3(c) 3(d) 2 3(e) 46,123 15,399 (3,507) 43,855 40,713 14,883 14,208 (3,695) (3,983) 81 (2,501) (817) 233 (4,167) 4,721 (12) (3,983) (2,550) 35 (897) (611) 207 196 (3,618) (3,427) 4,318 4,101 5,519 (193) 4,984 (311) 4,461 (304) – Amortization of trademarks – Impairment of trademarks – Goodwill impairment – Fox River – Gains on disposal of businesses and trademarks 3(f) 3(g) 3(g) 3(h) (58) (62) (44) (249) (273) (274) (58) 4,721 4,318 4,101 117 (577) (460) 27 (507) (480) 77 (581) (504) ventures Analyzed as: – Adjusted share of post-tax results of associates and 670 550 483 joint ventures – Issue of shares and change in shareholding – Smoking cessation programme – Gain on disposal of business – Canadian settlements – Trademark amortization and impairments – Restructuring costs – Health plan credit – Other 659 28 (23) 22 622 (9) 541 Finance income Finance costs Net finance costs Share of post-tax results of associates and joint 5 5 (16) 670 Profit before taxation Taxation on ordinary activities Profit for the year Attributable to: Owners of the parent Non-controlling interests Earnings per share Basic Diluted (59) (1) (3) 7 4,931 (1,556) 3,375 550 17 483 4,388 4,080 (1,248) (1,124) 3,140 2,956 3,095 280 3,375 2,879 261 3,140 2.713 243 2,956 157.1p 156.2p 145.2p 144.4p 137.0p 136.3p All of the activities during both years are in respect of continuing operations The accompanying notes are an integral part of the Group financial statements Appendix 2: Cash flow of British American Tobacco (65) (9) 16 British American Tobacco Group Cash Flow Statement For the year ended 31 December Note s Cash flows from operating activities Cash generated from operations Dividends received from associates Tax paid Net cash used in operating activities Cash flows from investing activities Interest received Dividends received from investments Purchases of property, plant and equipment Proceeds on disposal of property, plant and equipment Purchases of intangibles Purchases and proceeds on disposals of investments Purchase of Bentoel Purchase of Tekel cigarette assets Proceeds from associates’ share buy-backs Proceeds from ST trademark disposals Purchases of other subsidiaries and associates Proceeds on disposal of subsidiaries Net cash used in investing activities Cash flows from financing activities Interest paid Interest element of finance lease rental payments Capital element of finance lease rental payments Proceeds from issue of shares to owners of the parent 25 25 25 2011 2010 2009 £m £m £m 5,537 5,207 4,645 476 461 328 (1,447) (1,178) (1,095) 4,566 4,490 3,878 79 (510) 45 (107) 59 (497) 61 (87) (1) 83 (450) 39 (104) 37 (370) (12) 71 187 25 25 (295) (1) 12 (451) (589) (578) (2) (17) (576) (2) (35) 2 1,361 (755) 892 (179) 1,447 (267) (123) (10) (66) (12) (94) (712) (580) (13) Proceeds from the exercise of options over own shares held in employee share ownership trusts Proceeds from increases in and new borrowings Movements relating to derivative financial instruments Purchases of own shares Purchases of own shares held in employee share ownership trusts Purchases of non-controlling interests 25 25 25 18 Reductions in and repayments of borrowings Dividends paid to owners of the parent Dividends paid to non-controlling interests Net cash used in financing activities Net cash flows (used in)/from operating, investing 25 (1,304) (1,582) (1,853 (2,358) (2,093) (1,798) (275) (234) (234) (4,047) (3,864) (3,405) and financing activities Differences on exchange (Decrease)/increase in net cash and cash (193) (48) 175 29 (116) (125) equivalents in the year Net cash and cash equivalents at January Net cash and cash equivalents at 31 December (241) 2,183 1,942 204 1,979 2,183 (241) 2,220 1,979 2011 2010 2009 £m £m £m 10 11 12 13 14 15 16 11,992 3,047 2,613 105 343 305 40 179 18,624 12,458 3,117 2,666 122 411 272 29 128 19,203 12,232 3,010 2,521 105 350 171 26 93 18,508 17 18 14 15 3,498 127 2,423 57 3,608 73 2,409 58 3,261 97 2,344 57 19 The accompanying notes are an integral part of the Group financial statements Appendix 3: Balance sheet of British American Tobacco British American Tobacco Group Cash Flow Statement For the year ended 31 December Note s Assets Non-current assets Intangible assets Property, plant and equipment Investments in associates and joint ventures Retirement benefit assets Deferred tax assets Trade and other receivables Available-for-sale investments Derivative financial instruments Total non-current assets Current assets Inventories Income tax receivable Trade and other receivables Available-for-sale investments 19 Derivative financial instruments Cash and cash equivalents 16 19 Assets classified as held-for-sale Total current assets Total assets Equity Capital and reserves Share capital Share premium, capital redemption and merger 159 2,194 8,458 37 8,495 27,119 145 2,329 8,622 35 8,657 27,860 156 2,161 8,076 30 8,106 26,614 506 506 506 3,913 1,112 2,636 8,167 3,910 1,600 3,190 9,206 3,907 1,032 2,168 7,613 (1,539) 307 8,474 (750) 342 9,548 (772) 299 7,912 21 12 13 22 23 16 8,510 1,003 556 458 184 87 10,798 8,916 770 509 187 193 92 10,667 9,712 1,129 527 144 180 94 11,786 21 18 22 23 16 1,766 494 236 5,174 177 1,334 467 282 5,335 227 1,370 364 312 4,727 127 7,645 7,645 27,860 6,900 6,916 26,614 26(c) reserves Other reserves Retained earnings Owners of the parent after deducting – cost of treasury shares Non-controlling interests Total equity Liabilities Non-current liabilities Borrowings Retirement benefit liabilities Deferred tax liabilities Other provisions for liabilities and charges Trade and other payables Derivative financial instruments Total non-current liabilities Current liabilities Borrowings Income tax payable Other provisions for liabilities and charges Trade and other payables Derivative financial instruments Liabilities directly associated with assets classified as held-for-sale Total current liabilities Total equity and liabilities 20 26 7,847 27,119 The accompanying notes are an integral part of the Group financial statements Appendix 4: Net finance costs 20 2011 £m £m Finance costs – Interest payable – Bank borrowings – Finance leases – Facility fees – Other 2010 £m £m 2009 £m £m 602 82 476 – Fair value changes on derivative financial instruments – Exchange differences on financial liabilities 81 492 567 583 12 209 (285 ) 507 (2) 577 Finance income – Interest and dividend income – Interest income in respect of available-forsale investments – Gains in respect of available-for-sale investments – Dividend income in respect of available-forsale investments – Other interest income 602 (85) (1) (1) (2) (79) (2) (57) (82 ) (60) – Exchange differences on financial assets (35) 33 (117) (27) (77) Net finance costs 460 480 504 The Group manages foreign exchange gains and losses and fair value changes on a net basis, as shown below The derivatives that generate the fair value changes are detailed in note 16 Fair value changes – Cash flow hedges transferred from equity – Fair value hedging instruments – exchange related movements – Fair value hedging instruments – net interest income – Fair value hedging instruments – interest related movements (see note (i)) – Fair value changes on hedged items – interest related movements (see note (i)) – Instruments held-for-trading (note (ii)) Finance costs – exchange differences on 16 86 (14) (7) (62) (74) (65) (51) (75) (13) 39 73 12 54 302 209 (285 (17) (2) 21 financial liabilities Finance income – exchange differences on financial assets ) (35 ) (25 ) 33 (4 3) http://www.cliffsnotes.com/study_guide/Flexible-Budgets.topicArticleId-21248,articleId-21241.html 22 (13) 23 [...]... all operating activities Outcome 4.3 Financial statements using appropriate ratios and comparisons both internal and external Financial ratios are useful indicators of a firm’s performance and financial situation Most ratios can be calculated from information provided by the financial statements Financial ratios can be used to analyze trends and to compare the firm’s financials to those of other firms... 27,119 The accompanying notes are an integral part of the Group financial statements Appendix 4: Net finance costs 20 2011 £m £m Finance costs – Interest payable – Bank borrowings – Finance leases – Facility fees – Other 2010 £m £m 2009 £m £m 602 82 1 8 476 – Fair value changes on derivative financial instruments – Exchange differences on financial liabilities 81 2 8 492 567 583 12 209 (285 ) 507 (2)... Group financial statements Appendix 3: Balance sheet of British American Tobacco British American Tobacco Group Cash Flow Statement For the year ended 31 December Note s Assets Non-current assets Intangible assets Property, plant and equipment Investments in associates and joint ventures Retirement benefit assets Deferred tax assets Trade and other receivables Available-for-sale investments Derivative financial. .. liabilities Deferred tax liabilities Other provisions for liabilities and charges Trade and other payables Derivative financial instruments Total non-current liabilities Current liabilities Borrowings Income tax payable Other provisions for liabilities and charges Trade and other payables Derivative financial instruments Liabilities directly associated with assets classified as held-for-sale Total current liabilities... liabilities and stockholders’ equity (sections of the balance sheet) during the period shown in the heading of SCF Outcome 4.2 Financial statements for different types of business There are 3 type of business: sole trade, partnership and company; the table below shows the differentiation of financial statement in different type of business Balance sheet Sole trader Partnership The profits (or losses) each year... Instruments held-for-trading (note (ii)) 9 Finance costs – exchange differences on 16 86 4 (14) (7) (62) (74) (65) (51) (75) (13) 39 73 12 54 302 209 (285 3 4 (17) (2) 21 financial liabilities Finance income – exchange differences on financial assets ) (35 ) (25 ) 33 (4 3) http://www.cliffsnotes.com/study_guide/Flexible-Budgets.topicArticleId-21248,articleId-21241.html 22 (13) 23 ... among the partner and is included in the income statement as allocation of net income Interest on capital and Life-Policy Premiums Limited liability: Company will have to prepare based on International Financial Reporting Standards or generally accepted accounting principles 12 Salary expenses, corporation tax, and insurance c) Statement of cash flow Sole trader: Cash flows from operating activities,... Available-for-sale investments Derivative financial instruments Total non-current assets Current assets Inventories Income tax receivable Trade and other receivables Available-for-sale investments 19 Derivative financial instruments Cash and cash equivalents 16 19 Assets classified as held-for-sale Total current assets Total assets Equity Capital and reserves Share capital Share premium, capital redemption and... partner and is included in the income statement as allocation of net income Cash received from investment activities such as capital and paid on loans Company will have to prepare based on International Financial Reporting Standards or Generally accepted accounting principles Same as sole trader, cash flow from all operating activities a) Balance sheet Sole trader: The profits (or losses) each year are... 3,140 2.713 243 2,956 157.1p 156.2p 145.2p 144.4p 137.0p 136.3p All of the activities during both years are in respect of continuing operations The accompanying notes are an integral part of the Group financial statements Appendix 2: Cash flow of British American Tobacco (65) (9) 16 British American Tobacco Group Cash Flow Statement For the year ended 31 December Note s Cash flows from operating activities