BELLWAY PLC.

Bellway Plc.

[Bellway Plc.

To: Director

From: Financial Analyst

18 July 2013

Subject: Accounting Analysis of Bellway plc.

Introduction

Companies listed in stock exchanges attract special attention from investors and other stakeholders. They require financial statements that fulfill their needs. The use of accounting ratios and their interpretation aids in fulfilling this purpose. Financials for the last five years are deemed necessary as they provide a better picture and a clearer understanding.

Discussion

Published financial statements of Bellway plc for last five years

Income Statement

Source: Finnacials.morningstar, 2013

Balance Sheet

Source: Financials.morningstar, 2013

Stakeholder groups

The 4 stakeholder groups who would be interested in utilizing these financial statements are as follows:

Investors

Investors are primarily shareholders that invest in a particular business. In case of Bellway plc. shareholders have made an investment in the company as it is publicly traded and listed on the stock exchange. Investors would use financial statements to evaluate and analyze the financial position of the company so that they can take a sound investment decision. Investors would also use the same to decide whether it is worth maintaining the investment in a company previously invested or to withdraw the investment. They will use it to judge the profitability of the business and conclude the direction in which it is heading (Open.edu, 2013).

Creditors

Creditors include trade payables, lenders and other people or institutions that have lent the business some money or services. They are particularly keen in keeping a close watch in the financial health of a business. A creditor while deciding whether to lend the business goods will first go through the financial statements of the enterprise as this will give him a fair idea of the liquidity of the business. A bank uses the cash flow statement and income statement to make a decision of lending as it is crucial for the bank to know of the borrower can repay the principal with interest. Banks will also keep a close watch as to the amount of fixed assets that can be charged as collateral (ehow, 2013).

Government

Although a secondary stakeholder, governments tend to keep a close watch on the financial positions of a business. This is because corporations pay enormous corporation taxes and provide employment opportunities and contribute to the GDP. It is critical for taxing authorities to have a set of audited financial statements as this will be the primary document to judge whether the company has paid taxes timely and fully. It also helps the government to judge whether the business will continue to operate as a going concern as its existence and continuation means a lot for the state (Ukut, 2010).

Employees

Job security is an essential need of employees and is best described and assured by the audited financial statements. Employees can judge from the financial statements whether the business is making a profit so that the business can continue as a going concern and their jobs can remain intact. Secondly it gives them an insight into the liquidity position of the enterprise. If the liquidity position is good and is not expected to worsen, employees can be paid on ...