SYNTHESIS PLC

Synthesis plc

Synthesis plc

Question 1: What is/are the principal activity/activities of this business?

Synthesis plc is one of the leading designer brands that is operating with the support of three main channel distributions: wholesale, licensing and retailing. They are offering Womenswear Menswear Endurance Phormal Global Lingerie Accessories Childrenswear Underwear and, Fragrance (perfumes).

Question 2: Comment on the outcome of the auditor's report for Synthesis Plc. Briefly discuss the importance the auditor's report with respect to financial information.

The company that is responsible for synthesis plc audit is EagleEye Audit plc. The company is responsible to verify all the transactions made by synthesis plc. A auditor report is declared by EagleEye plc. All the yearly financial statements are analyzed using different tools and methods with accurate analytical skills and make sure that the financial statements that are published by the company to their stakeholders are fairly presented. EagleEye also observes that all the financial statements are complied with IFRS standards. In addition, the auditor agrees with the Directors' assessment of the company's financial performance.

The auditor's report acts as a useful independent check on the accuracy and fair representation of the company's economic picture by its management. Auditor makes sure that the internal bias doesn't make its way into the financial statements that may result in a distorted and misleading view of the company. The auditor also ensures that financial statements meet all applicable laws and are consistent with accounting principles and their original intent (Groppelli & Angelico, 2000: 433).

Question 3: Ratio Analysis.

Below is the chart that is presenting the computation and the formula used to calculate following Ratios:

Ratio

Expression

2010

2009

2010

2009

Industry

Trade receivables period

Trade Rec/ Sales x 365

20466 x 365

14128 x 365

48.93

36.26

 

 

 

152661

142231

 

 

 

ROE

Net Income/Shareholder's Equity

12568

15242

20.21

27.35

19%

 

 

62202

55723

 

 

 

Gross profit margin

(gross profit/income) x 100

89366

82671

711.06

542.39

10%

 

 

12568

15242

 

 

 

Net profit margin

Net Income/sales revenue

12568

15242

8.23

10.72

3%

 

 

152661

142231

 

 

 

Current ratio

Current Assets/Current Liabilities

65024

57329

1.93

2.24

1.7

 

 

33607

25573

 

 

 

Inventory turnover period

365/(cost of goods sold/average inventory)

63295

59560

215.18

179.65

50 days

 

 

37315

29315

 

 

 

Payables' turnover period

365/(Cost of goods sold / Average accounts payable)

63295

59560

171.88

133.46

20 days

 

 

29806

21777

 

 

 

Gearing ratio

Long Term Borrowings/ Share Holders Funds

575.00

843

0.92

1.51

4%

 

 

62202

55723

 

 

 

P/E Ratio

Market Price/ (Net Income/ outstanding shares)

345/ (12568/80000000)

480/(15242/43198033)

2196053.47

1360389.44

9.0 x

Question 4: Calculate the yearly percentage change in the following items stating, in each case, whether the change is a rise or fall:

Sales

Operating Profit

Share Price

Following is the table in which the yearly percentage change are mentioned:\

2009

2010

% change

Sales

142,231

152661

7

Operating Profit

22142

17161

-22

Share Price

10

75

650

From the above table is can be seen that the sales have increased by 7%. Operating profit has decreased by 22% which is a positive sign for a company. The share price of the company has raise dramatically by 650%. This increase has made many changes for the company. Raising by 650% means that the company has grown by 650%. Many new investors will also be attracted after witnessing this huge growth the organization has made.

Question 5

From the above table, it can be said that the performance of Synthesis plc in terms of trade receivables is good in 2009 as compared to 2010 as the receivables days are less in 2009 that is 36.2 which is not a satisfactory condition for the company. Moreover, the profitability structure of Synthesis plc is above average both in 2009 and 2010; the reason of this statement is that ...