Research Proposal on Accounting
1. What is the company’s activity?
The Group has two main activities:
- Designing, manufacturing and selling yachts and powerboats through an international network of dealers, with this activity grouped under the “Boats” sector. The Group is the world market leader for sailboats and a pivotal player on the European powerboat market;
- Designing, manufacturing and selling mobile homes, with this activity grouped together under the “Mobile Homes” sector.
2. How is the business doing ? Are sales increasing?
Bénéteau is doing very very well, as sales fo the group increased from 826,2 millions of euro in 2006 to 1013,7 millions in 2007.
3. What kind of investments does the company have?
Equity and loans
4. Did these investments increase during the last period?
Long term financial investments increased from 85 659 thsd. at the beginning of the period to 122095 thsd at the end.
5. Are some assets under capital lease?
6. What kind of inventories does the company have? Match with the activity.
Raw materials and other supplies, production work in progress, intermediate and finished products.
7. Among accounts receivable, identify “trade” receivable: are they important or quite low? What do you learn from this information regarding the clients?
Trade receivable increased from 2 108 thsd. at the beginning of the period to 3301 at the end. It means that clients are not paying in time and not all debts are collected yet. Though such payments are due in one year usually.
High amount will be BtoB, rather low BtoC activity
8. Identify in the accounts payable the amount of trade payable: What do you learn from this information concerning the relation with suppliers?
The amount of trade payables increased from 986 thsd. to 1599 thsd.
9. Does the company borrow money from banks (loans)?
During the period the company borrowed 18 086 thsd. from credit institutions.
10. Did the company issue notes? (bonds)
11. Did the Board of directors organize post employment benefits?
The Group records provisions for retirement benefits in line with the usual measures applicable. This concerns a defined benefit system. The obligation is calculated by an independent actuary based on the projected credit unit method, with a discounting rate of 5%.
In line with the option available under IAS 19, the Bénéteau Group records any actuarial differences under shareholders’ equity. The impact of changing from a discount rate of 4% to a discount rate of 5% is included in the income statement, booked directly against shareholders’ equity.
12. How much is the paid-in capital?
Share capital of the company is 8 715 thsd., additional paid-in capital is 27 750 thsd.
13. How high are retained earnings? What does this item show?
Retained earnings increased from 1 364 thsd to 1 508 thsd. Shows that the company was profitable enough, refers to the portion of net income retained by the company and not distributeds among its owners as dividends.
14. Did they issue preferred stocks?
15. Did they organize a buying back program? (treasury stock)
Treasury stock increased from (4 502) thsd. to 20 980 thsd.
16. Calculate the Gross Profit (gross margin) and compare with previous period
Gross profit in 2007 was 152 529 thsd., and in 2006 it was 99 379 thsd.
17. Can you find financial expenses or revenues? If yes, how can you explain them?
Cost of net financial debt in 2007 was 1 301 millions (652 in 2006), other financial income and expenses amounted 1 457 millions(2 303 in 2006). Revenues come from investments or interest received while expenses will be interests paid on loans or notes
18. What is the amount of taxes for the period?
15 443 thsd. in 2007 and 12 899 thsd. in 2006.
19. Is the company posting profits these 2 last periods? Does profit increase or decrease in the same proportion as revenue ?
Operating profit increased from 104 021 thsd. in 2006 to 135 254 thsd. in 2007.
20. How is “earning per common share” calculated? Who is looking at this information?
Net earnings per share increased from 0.86 euros in 2006 to 1.13 euros in 2007. This information is valuable to investors.
21. Identify Shareholders’ Equity at the beginning of the period : is the balance at the end of the period higher or lower ? How do you explain the difference?
Shareholders’ Equity increased from 597 872 thsd. to 811 679 thsd. It means that financing of the company increased.
22. Does the company creates or uses cash during the period?
Company is generating cash as cash position at year start was 195 422 thsd. and at the year end 240 180 thsd.
23. Identify which step provides cash and which one needs cash.
The company is generating cash from operations, and utilizes it for operating activities and financial activities. The situation with cash is well managed.
24. Read the external auditors report. Who is it prepared for? Summarize in 3 lines its content.
The report was prepared by KPMG. It says that the audit was prepared in accordance with industry standards applicable in France. An audit includes examination, on a test basis, evidence supporting the amounts and information contained in accounts. An audit also involves assessing the accounting methods and principles used and the significant estimates made when drawing up the accounts, as well as evaluating the overall presentation of the financial statements. It also presumes that the audit company did not have any signs of insincerity form the side of the company regarding the presentation of the results.
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