Interpretation of Accounts

bobjimmy

Im not too sure on this topic. I know the ratios and i know you have to write on Liquidity Profitability Dividend policy Gearing and Interest cover but what else would you need to write about in the different cases e.g Shareholders, Debenture holders, Bank.?

RyanCCFC

bobjimmy wrote: »

Im not too sure on this topic. I know the ratios and i know you have to write on Liquidity Profitability Dividend policy Gearing and Interest cover but what else would you need to write about in the different cases e.g Shareholders, Debenture holders, Bank.?

Ordinary Shareholder:
Profitability,
Liquidity
Dividend Policy
Sector
Gearing + Interest Cover
Reserves Policy
Investment Policy
Real Value of Fixed Assets.

Debenture Holders:
Similar except Investments

Bank Manager:
Same as Debenture holders, but you're looking at the point of view of loans. Should this bank give company 'X' a loan for example.

bobjimmy

Thanks Ryan . What do you mean by Reserves policy? Also would you need to include something about The market value of the share?

RyanCCFC

bobjimmy wrote: »

Thanks Ryan . What do you mean by Reserves policy? Also would you need to include something about The market value of the share?

Reserves policy is how much profit are they keeping. Lets say they make 60000 net profit. Let's say 5000 of that goes to preference dividend holders leaving net profit minus preference dividend at 55000. Lets say that they give 50000 of that to the ordinary share holders. Leaving only 5000 in reserve. That would be giving out excessive dividends which wouldn't please the average shareholder in the long run if they have a loan/debenture coming up in the next few years to pay.

Sorry I forgot market value of a share. You should try fit that in somewhere, especially in bank. If you are doing it from the bank's point of view the price of ordinary share going down means there is a lack of confidence in the business's future on the stock market.