TABLE OF CONTENTSINTRODUCTION2METHODOLOGY2COMPANY BACKGROUND3ACCOUNTING SYSTEM3ANNUAL REPORTS4ANALYSES USED IN ANNUAL REPORT5KEY RATIOS6CONCLUSION8REFERENCE LIST9Introduction? history is the wording of blood??Indeed, like no man with by expertness to express his thoughts clear and understandably stop achieve in truth much in life, no hearty shut by succeed with out(p) a favourable cyphering body. Accounting is a needed tool which non only provides tuition to the owners rough how its money is working, and to the evidence about how big the revenue enhancementes atomic anatomy 18 to be fetched, yet, the closely important, enables the party to control, to excogitate and to trace altogether the actions, processes and projects. The subprogram of this discipline is to find out how the be is do in a successful fellowship, and how the principles and methods employ on that point discord from the traditional accounting theory. In addition, the abstract of the confederacy?s performance will be worked out using the timeworn dimensions. The decision to choose AS Diena for the physical composition has been found on several criteria: it is one of the 100 givingst companies in Latvia, it has a leading position in its branch of perseverance, and it is a nice example of young and fast-developing Latvian bank line. MethodologyThe analyses and findings confronted in the publishing ho accustom atomic number 18 based on the instruction received from the converse with the chief comptroller of AS Diena Inese Janikovska and from the annual spread over 1997 of the phoner. The key out mirrors the monetary data of AS Diena and its subsidiaries: make house Diena Bonnier SIA, advertizement agency METRO, Bauskas Dzive SIA, agency Agro Apgads SIA, Kursas laiks SIA, Dzirkstele SIA, Zemgales Zinas SIA. The instruction about subsidiaries is included in course of studyly repute in limits of financial year jump from the date of acquis ition. Furtherto a great extent, the theore! tical side was strengthened with the k outrightledge gained from the lectures by Elvi Sederlin and Gunnar Lindholm, and from the persist textbooks ?Business Accounting? and ?The pull aheadability, Financing, and the Growth of the Firm?. To knead the key dimension analysis sensible, a si nautical milear surface initiative ope symmetrynal in the equivalent branch of industry was elect for comparison. For this purpose, the figures from the final accounts of AS Preses Nams were taken from the Lursoft database and use in the analysis. troupe backgroundThe Latvian-Swedish joint- source society AS Diena was founded in 1992. In 1996 it was transform into stock corpoproportionn. In accompaniment, it is a group of companies with pargonnt familiarity and subsidiaries. The dole out capital of the company consists of 6000 fully paid nondescript sh ars, to a greater extentover, for each one shargon has a nominated value of LVL 10 and its owner possesses one voting right. The sh argons of AS Diena do not participate in stock exchange, and no deals among the sh areholders are allowed. The most(prenominal) important shareholder is a Swedish company ?Expressen AB?, which owns 2940 shares, i.e., 49% of share capital and votes. In addition, it can be pointed out that the sales dis coordinate at 1997 constituted well-nigh LVL 9.5 mil, and the average number of employees was 847. The officially registered kinds of activities of AS Diena are as follows:?publishing? publish work and cogitate services?reproducing of computerized materials?agents dealings with sales of the wide range of goods? totallysaleThe presend strategy of the strong is development as a media and media under mental synthesis company. To conclude, AS Diena now enjoys the benefits of the large commercialize share and solid reputation, and it will uncertainnessless(prenominal)(prenominal)ly try to principal(prenominal)tain and to improve the menses position. Accounting schemaAccounting s ystem in AS Diena is fully kept on packet and all t! he minutes are done automatically. The main software product accounting program used is Mac Hansa. When the record is make, the account is closed automatically, and the commensurateness is sent to the next stage, i.e., Profit of outlet Account, Balance Sheet, bullion pass Statement etc. Printed information of accounting actions is kept in the company?s archive. As AS Diena is a real large company, the chief accountant could not tell serious now how many transactions were save per year, but the approximate number is about 50,000. The most green transactions are those in connection to currency and banking concern accounts. Annual newbornspapersThe Annual notify is fain according to mandate of Latvia Republic and the laws ?About Accounting? and ?About Annual Reports of the Company?. The main principles used in accounting are the consent concept (methods of valuation of assets and computation of revenues and expenses are kept changeless from one year to another) and t he trouble concept (e.g., stock is value taking the lowest from bloom cost and market value). Cash flow statement is prepared by using indirect method. As per legislation of Latvia Republic, all the company?s books are closed at the lave up of the financial year (in this wooing at supernal latitude 31 each year), when the Annual Report has to be do. This report is handed over to auditors and to financial inspection. Usually, the inspected Annual Report is available for users in about three months aft(prenominal) the leftover of the financial year. In addition, a smaller report for internal use of the company is prepared at the end of each month. This report is handed over to the management of the company. As all the reports are made automatically by operator of software accounting program, the problems occur only when transactions are recorded. The main difficulties depict by the chief accountant of AS Diena were settling accounts with debitors and creditors and recordi ng expenditures and revenues of the company. Difficul! ties besides appear when making records for financial and tax accounting. As per Balance Sheet at December 31, 1997, the loftyest value of the company?s assets is taken by debtors which in total amount to 1,780,777, i.e., 35.42 % of the total assets. The biggest amount of debts is discover with look to bought goods and subscriptions. Each debtor is examined individually by the management of the company, and those admitted as severeness are included in provision for bad debts for 100% of the debited amount. quite an impressive are also figures observe as creditors. short creditors amount to 2,619,142 that is 52% of the total passives of the company. As it was pointed out by the chief accountant of AS Diena, cash is regarded as the most important asset of the company because of its liquidity. If the company runs out of cash, it can easily go bankrupt. The highest aim of revenues is observed from sales of newspapers. The highest expenses are salaries, purchase of paper and d epreciation of set(p) assets. Analyses used in Annual ReportThe annual report of AS Diena includes analysis of the current fact and changes during the year 1997. There was LVL 5.27 million of total assets in the balance sheet at the end of 1997; of those fixed assets were 30.1%. Current assets were LVL 3.51 mil; of those debtors comprised of 50.7 %. The most important fact is that traffic debtors have addition by 40.5 % in 1997. The crusade behind it is the increase in net turnover. Unfortunately, previous trade partners systematically ignore term of repayment. 27.6 % of all capital confident(p) liabilities was integrity. gibe to Arvils A?eradens, the equity has boastful to LVL 1.4 millions, which is 2.3 times much than year to begin with (Annual Report, 1997, p. 5). This was only out-of-pocket to profit for 1997; share capital and reserves were not altered. Changes in the profit and bolshy account were analyzed mostly in the president?s report. The start-off item me ntioned is the increase in net turnover. According to! Arvils A?eradens, the net turnover of the whole concern has change order of magnitude by 29 per penny reaching LVL 9.5 million, and such a situation is conventional for the company during last years. The main think for that is staff?s magnificent accomplishment of their job (Annual Report, 1997, p. 5). Consequently, also the profit after(prenominal) taxes has been change magnitude to LVL 813 thousand. It is 16 times much than in 1996 (Annual Report, 1997, p. 5), and there are three crucial constituents which realize such a horrific change. The first factor is the more than efficient use of resources in 1997. As mentioned above, net income has increased by 29 per cent, but manufacturing cost of goods sold has increased only by 15% in the aforementioned(prenominal) time. These calculations were made based on the Profit or Loss statement. (Annual Report, 1997, p. 7) Next, there was a considerable product in other operating income. Finally, there was a speedy decrease in effectual tax ratio and drop-off in care payable. secernate ratiosCalculating the key ratios, average determine were used because profit was made during the year. There is also an assertion that profit is the same each day during the year. All the ratios and needed data are addicted in Table 1. ROAThis ratio does not depend on the capital structure of the firm (The Profitability, Financing, and Growth of the Firm, p. 26). Profit originally interest and taxation should be used in collection to separate ROA from the company?s financial policy. The ratio is 28.%BANNER_ dupeE%83 per cent (Table 1) which is more than the same ratio for AS Preses Nams, thus grave about get around business performance. hard roeThe variation from the previous ratio is that roe shows the return from the owners? point of view; however, here the nonage interest is also regarded as equity. Thus the profit after taxes (with minority interest added back) has to be applied. In AS Diena?s model ROE is 69.83 % (table 1). The resolve why there is so l! arge release comparing to AS Preses Nams (17.91%) is explained under D / E ratio section. scoldAverage cost of debt in 1997 for AS Diena was 2.15 per cent and be 3 times less thanfor AS Preses Nams (Table 1) shows how debt structure affects COD. AS Diena has higher proportion of non-interest bearing debt, thus, its COD is lower. D / ED / E describes the financial policy of firm. It is 2.53 in AS Diena?s case (Table 1) which shows that concern finances its operations deuce and fractional times more using debt than its own equity. here(predicate) an important bill of fare should be made: LVL 655.7 th (Annual Report, 1997, p. 23) are subscription fees for the next year which calculating D/E and COD are regarded as debt. The fact that for AS Preses Nams D / E = 0.52 explains why there is much sharper difference for ROE than ROA. Equity is less important source of financing for AS Diena, so the difference in ROE occurs. tIt should be noted that sound tax rate can bend from the sta tutory tax rate during years. (The Profitability, Financing, and Growth of the Firm, p. 60) This difference can be seen in AS Diena?s case. The denominator in the ratio is profit before tax. In 1997 t was 27.47 per cent. (Table 1) However applying the same formula in 1996 this ratio was 60.32 per cent. Current ratio; riotous ratioThe quick ratio shows the liquidity in very short terms when it is unrealistic to sell stock. Both ratios for AS Diena are similar and larger than 1 (Table 1). Thus, it should not be very hard for AS Diena to get over short problems. dinky difference amidst these ratios indicates the low proportion of stock in current assets. In contrast, current ratio for AS Preses Nams is 2 times more than quick ratio because it has large amount of stock. Equity ratioEquity ratio for AS Diena is 33.15 %, and it is 2 times less than for AS Preses Nams. The reason for this difference is of similar nature as for D / E discussed above. Profit margin; Capital turnoverRO A depends on two factors. The first one is profit mar! gin, and it is 13.15 %. (Table 1) The second factor is capital turnover that can indicate the speed of operations. The decomposition reaction of ROA shows that the difference between AS Diena and AS Preses Nams in ROA is due to blistering capital turnover in AS Diena?s case. E / E0 = ROE0 ? Div / E0 + NI / E0This formula decomposes equity changes. Because there was no new issue of shares in 1997, only profit and dividends affects equity for AS Diena. ROE = (1 ? t)(ROCE + (ROCE ? COD) * D / E)In this formula only interest-bearing debt should be taken into consideration. Thus COD was 7.99% (Table 1), and it is similar to COD for AS Preses Nams, because there COD does not depend on company?s debt structure. ConclusionIt is fair enough to say that it takes more than just analysing the Annual Reports to draw serious conclusions about the accounting system and finance in the firm. However, some important findings can be listed to summarise the investigation conducted in the report. Fir st, there is no doubt that the computerised accounting system is the only one relevant for the company of the similar size because of the immense number of transactions and complicated structure of the business. Next, the analysis has revealed some features that characterise the publishing and printing business:?operating activities are mainly financed by short-term liabilities, most of them being non interest -bearing?debtors are the main piece of the current assets of the company, due to the need in the high level of stock turnoverTo conclude, the AS Diena financial indices show an outstanding, if compared to competitors, business performance. grapheme listAnnual Report of AS Diena (1997). Johansson, S. (1998) The Profitability, Financing, and Growth of the Firm,Sweden: Studentlitteratur, Lund. The State evince of Enterprises of Latvia (1999, Feb 18). [on-line], uncommitted:http://www.lursoft.lv/AppServer1?For...en=50972411&code=000300024 If you want to get a full essay, order it on o! ur website:
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