U18655 Financial Reporting Assignment Sample

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Introduction: U18655 Financial Reporting

U18655 Financial reporting is defined as the process through which effective documenting of financial activities takes place such that the performance of the company is evaluated. It includes communicating the financial results of the company to the intended audience for a specific period. The current study is based on Barclay’s bank which is a British multinational company headquartered in the UK. The bank was founded by John Freame and Thomas Gould in the year 1690. The current study will analyse and evaluate the fact that how ratios influence investment decisions. Also, the different ratios will be calculated and assessed for analysing the financial health of the company. At last, the analysis and application of the different types of international accounting standards will be made. This evaluation is done to attract more investors so that more capital can be raised for the expansion of the company.

Main Body

This section provides a detailed financial analysis of Barclays Bank with the help of ratio calculations, interpretation, and evaluation of international accounting standards. With expert guidance from an Assignment Helper, the discussion focuses on how financial ratios directly influence investor decisions. The analysis also highlights key aspects of U18655 Financial Reporting, ensuring a clear understanding of how reporting practices shape investment outcomes and compliance with IAS standards.

Ratios influencing the investment decision

At the time of making the investment decision, the ratio plays a crucial role in making the decisions. The ratios of the business outline the financial health of the company by referring to its liquidity, solvency, efficiency and profitability. This is due to the reason ratio analysis includes a comparison of line item data and helps in assessing the current working capability of the company (La Torre et al, 2020). Thus, the ratios influence the decisions of investors to a great extent. For example, at the time of investing, the investors from the market research found that the company is operating well and in case they see that the profitability of the ratio is much less than expectations. Thus, here the investor will decide to invest in such type of company. So, with this, it is clear that the ratios play a crucial role in influencing the decisions of the investors.

Calculating and interpreting the investment ratios

With the analysis of the data, it is clear that the profitability of the company is not good. This is because of the reason that in comparison to the previous years, the net profit margin of the company has reduced. Thus, the calculated ratio outlined that the operating profit ratio of the company is more and the net profit is less. This simply implies that the expenses of the company are more and for this, they need to take measures to manage and control the expenses. When the expenses are controlled then automatically the overall efficiency will be improved (Revsine, Collins and Johnson, 2021). Moreover, with the help of the earnings per share, it is clear that the company does not have good EPS and the shareholder is not provided with a good amount of profits while investing in the company. It is due to the reason that in comparison to past years, the EPS has reduced and this implies the earnings provided to the shareholder have reduced. Moreover, by referring to the price-to-earnings ratio it is 6.61 and this implies that is it good for the company. The reason underlying the fact is that when the stock is trading at less value then more people will purchase it and ultimately the chances of increasing the profits is very high. Moreover, in comparison to previous years, it has increased and this is good for the company and its development.

U18655 Financial Reporting Assignment Sample

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Along with this, the equity ratio of Barclay’s Bank outlines how much the company is using the combination of debt and equity. According to the standard of debt-equity ratio, 2 or 2.5 is considered good. This signifies that a debt-equity ratio of 2.46 is good for the company. But now the company must not increase this ratio as in case it will increase from this point then a higher level of risk will be developed for the company. In addition to this, return on equity is another ratio which assesses the company’s performance which outlines the fact that how efficiently the company is managing the funds provided by the equity investors. But on comparison of the previous years, it is analysed that the return on equity has reduced and the company need to make amendments to their operational plan so that profits can be generated more (Sharawi and Shahawi, 2024). Along with this, it can be stated that the overall performance of the company is not too good and it needs to improve its working so that more investors can be attracted. The profitability and solvency of the company are not just good which signifies the fact that in case the investment is made into the company then it might not be providing better results. So for this, it is advisable for Barclay’s bank they effectively try to manage and maintain the operational activities so that more profits can be generated and goodwill can be increased.

Evaluating the application of different international accounting standards

The International Accounting Standards are defined as the set guidelines and the principles which need to be followed by the company while presenting their accounts. While preparing the financial statements of the company they must comply with all these standards so that the overall working can be improved (Pizzi, Rosati and Venturelli, 2021). These accounting standards are also followed by Barclays and the major IAS with which the bank complies are as follows-

IAS 1

This particular IAS relates to the way the financial statements are prepared and presented. This standard suggests that the statement of finance must separate the non-current from the current. This includes emphasising the meeting of overall requirements which need to be kept into consideration for making the financial statements (Hanifah, Sarpingah and Putra, 2020). According to IAS 1, Barclays Bank prescribes the working by the guidance provided under this standard.

Also, Barclay ensures that there is effective comparability among the statements of finance of the past years as well and for this reason, previous two years' data is also present in the current year report. For instance, the report is of 2023 period then in the financial report, the data of 2022 and 2021 are also presented (IAS 1 — Presentation of Financial Statements, 2024). This is done so that the reader of the report can easily analyse and compare the data from the past two years. Moreover, according to this standard, Barclays has stated that the objective of the financial statement is to provide clear information relating to the financial position of the company. According to this standard, the company provides for the effective treatment of all the assets, liabilities, income, expenses, equity and all the other related items present in assessing the profitability of the company.

IAS 8

The IAS 8 emphasises the principles for the selection and changing of the different policies relating to accounting along with the treatment of accounting and also provides guidance relating to disclosure of the changes. These accounting policies are the principles and bases which need to be applied by Barclays to accomplish the objective of the study and try to present all the findings better (De Villiers and Sharma, 2020). Thus, by following the current standard, Barclays comply with all the different types of policies and accounting standards being set. Also, in case Barclays make any change in the policies they were using then according to this standard they have to communicate this change with every stakeholder of the company. It is due to the reason that in case any accounting policy or standard is changed then it must be duly communicated with the intended audience.

Moreover, by considering this IAS, Barclays try to incorporate effective guidance relating to the policies and practices that need to be followed well. In case it will not be adhered to by the company then the overall efficiency is impacted to a great extent. Thus, according to this IAS, Barclays also has to comply with SIC-2 which relates to consistency and SIC 18 which emphasises the consistency of the alternative methods (IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors, 2024). So it is the responsibility of Barclay they effectively include the different amendments and also all the material information must be included into practice well.

IAS 10

This is a type of standard which emphasises the setting up of rules which the company must adjust within the financial statements about the event taking place after the reporting period. Many of the transactions are of such type which occurs after ending of the financial year. Hence, the treatment of that particular aspect is listed in this particular standard. It includes the analysis of both the non-adjusting and adjusting events which have taken place after the end of the financial statement period (Mosteanu and Faccia, 2020). Among these, the adjusting events are the one which provides the evidence relating to that particular event taking place at last of the reporting period. In contrast to this, the non-adjusting events are the one which outlines the event which arises after the reporting period.

For the effective and successful working and making of the financial statements, it is clear that the time of the event must be analysed before including it in the financial statements. In case the event belongs to the current year for which the statements are prepared then it will foster the making of the statements well. Moreover, in case the event does not belong to the current year then the treatment of that particular event will be done in the next year only (IAS 10 — Events after the Reporting Period, 2024). So, it is necessary for Barclays that they must effectively try to manage and maintain the working well. In case any of the transactions is recorded in the current year whereas it belongs to the next year then the working will be impacted for the current year.Conclusion and RecommendationIn the end, it is concluded that for the effective working of the company, it is mandatory for the company that effective financial reporting is done. The financial reporting assists in managing the work well and as a result of this, the overall financial statement and disclosure are appropriate and effective. Moreover, with the ratios it was analysed that the performance of the company is worth the investment. In case the investors will decide to invest in Barclays then it will be beneficial for the investors as a good amount of profit will be earned. Along with this, it was examined that Barclay Bank complies with the IAS 1, 8 and 10 for managing and reporting all the transactions into the financial statements.

Recommendations

• According to the findings it is recommended to Barclays Bank that they must effectively try to reduce the unnecessary expenses. This is due to the reason that because of high expenses, the profitability of the company has reduced (Christensen, Hail and Leuz, 2021). Thus, Barclay must ensure that they try to minimise unnecessary expenses so that the overall work can be improved.
• Along with this, it is also advisable to Barclay that they must have a sound research and development department. This is necessary because there are many modifications taking place in the standards and way of working (Arvidsson and Dumay, 2022). Thus, a sound R&D department will be continuously monitoring the recent changes and all the changes applicable to the company will be implemented into the working well.

References

Books and Journals

• Arvidsson, S. and Dumay, J., 2022. Corporate ESG reporting quantity, quality and performance: Where to now for environmental policy and practice?. Business strategy and the environment, 31(3), pp.1091-1110.
• Christensen, H.B., Hail, L. and Leuz, C., 2021. Mandatory CSR and sustainability reporting: Economic analysis and literature review. Review of accounting studies, 26(3), pp.1176-1248.
• De Villiers, C. and Sharma, U., 2020. A critical reflection on the future of financial, intellectual capital, sustainability and integrated reporting. Critical Perspectives on Accounting, 70, p.101999.
• Hanifah, S., Sarpingah, S. and Putra, Y.M., 2020. The Effect of Level of Education, Accounting Knowledge, and Utilization Of Information Technology Toward Quality The Quality of MSME’s Financial Reports.(3).
• La Torre, M., Sabelfeld, S., Blomkvist, M. and Dumay, J., 2020. Rebuilding trust: sustainability and non-financial reporting and the European Union regulation. Meditari Accountancy Research, 28(5), pp.701-725.
• Mosteanu, N.R. and Faccia, A., 2020. Digital systems and new challenges of financial management–FinTech, XBRL, blockchain and cryptocurrencies. Quality–Access to Success, 21(174), pp.159-166.
• Pizzi, S., Rosati, F. and Venturelli, A., 2021. The determinants of business contribution to the 2030 Agenda: Introducing the SDG Reporting Score. Business Strategy and the Environment, 30(1), pp.404-421.
• Revsine, L., Collins, D.W. and Johnson, W.B., 2021. Financial reporting & analysis. McGraw-Hill.
• Sharawi, H. and Shahawi, M.M., 2024. The Impact of ESG Disclosure on Financial Reporting Quality: Evidence From KSA. Journal of Survey in Fisheries Sciences, pp.98-108.

Online

• IAS 1 — Presentation of Financial Statements. 2024. Online. Available through: < https://www.iasplus.com/en/standards/ias/ias1>
• IAS 10 — Events after the Reporting Period. 2024. Online. Available through: < https://www.iasplus.com/en/standards/ias/ias10>
• IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors. 2024. Online. Available through: < https://www.ifrs.org/issued-standards/list-of-standards/ias-8-accounting-policies-changes-in-accounting-estimates-and-errors/#:~:text=and%20Errors%20%C3%97-,About,estimates%20and%20corrections%20of%20errors.>