Financial Resources

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Every company as a mandatory requirement by government prepares the auditor’s report. This report satisfies the company’s various stakeholders i.e., government, investors, lenders, suppliers and a general reader of financial statements that the company’s annual report has been prepared fairly. Both the companies’ auditor report gives a true and fair view of the company’s performance.
The profit and loss statement is important for the stakeholders interested in reviewing the financial performance of the company over the year. Caf Nero Plc’s profit and loss statement is much well defined showing profit than that of Coffee Republic Plc showing loss for the period.
It is of importance to the stakeholders who are interested in the financial position of the company for a particular point in time. Caf Nero Plc’s balance sheet show an increasing net worth of the company, while the balance sheet of Coffee Republic Plc shows a declining net worth of the company.
This statement shows the company’s position in terms of cash availability. Cafe Nero Plc’s cash flow statement shows an increase in total cash available in the company, whereas the Coffee Republic Plc’s cash flow statement shows a severe decrease in cash for the year 2005.
The notes provide an insight into the company’s financial position and performance by showing breakdowns of facts and figures stated in its financial statements. …
Although, there has been a practice for the companies listed in the London Stock Market, but the companies under consideration has no such trend. None of the company has included an operating and financial review statement in its annual report.
Hence, their relevance cannot be figured out in terms of providing information to the companies’ stakeholders.
The financial performance of Caf Nero Plc has been analysed with the help of financial ratios on the basis of data obtained from the company’s annual report for the year 2005, 2004 and 2003.
2005 2004 2003
Return on Capital Employed
13.31% 7.16% 4.14%
According to this ratio, the return generated by the company on the capital employed by the company has been increasing for the three years. It was 4.14% in 2003 and increased to 13.31% in the year 2005. This shows that the company has been performing well over the years to generate return on the capital it has employed by the company.
2005 2004 2003
Return on Equity
31.37% 23.93% 6.29%
The return generated by the company on the funds invested by shareholders has also been increasing over the years. The company generated 6.29% return on its equity in the year 2003, which increased to 31.37% in 2005. This exhibits brilliant performance on the part of the company’s management.
2005 2004 2003
Net Profit Margin
8.57% 4.66% 2.90%
This ratio shows that the company has been getting more and more profit for the last three years on its sales after accounting for various costs such as cost of sales, operating costs etc. This ratio has almost quadrupled over just three years, showing a remarkable