Rolls royce anual report Coursework Example | Topics and Well Written Essays - 1000 words

Rolls royce anual report - Coursework Example The external auditor of the company has given an opinion according to which the group financial statements of the company present a true and fair view for the financial year ending December 31, 2012. The auditor reports states that the group financial statements are adequately prepared in accordance with the International Financial Reporting Standard (IFRS) and Companies Act 2006. It is also mentioned in the audit report that the financial statements of the company have been prepared in accordance with the Generally Accepted Accounting Principle (GAAP) as adopted by European Union. The audit report forms an integral part of the financial statements of a company, especially a public listed company. The primary purpose of the audit report is to bring into the knowledge of the users of the financial statements whether these financial statements are prepared in accordance with the applicable financial reporting framework. [Readyratios.com (2011)] Users of the financial statement usually do not have the time to thoroughly analyze the authenticity of the financial statements. They take reliance of from the audit report that whether the financial statements are giving a true and fair view or not. ... 69% 3% Current ratio 1.33 1.2 1.70 Inventory turnover period 109 days 112 days 50 days Payables’ turnover period 247 days 262 days 20 days Gearing ratio 1.967 2.634 4% P/E ratio 7.1 16.43 9.0 x Answer to Question No. 4 2012 2011 Variation % variation Change in million ? Sales 12,161 11,124 1,037 9.32% Rise Operating Profit 1,373 1,186 187 15.77% Rise Share Price (pence) 874 755 118 15.66% Rise Answer to Question No. 5 During the current financial year, the return on equity (ROE) has considerably increased during the current financial year. The return on equity is calculated by dividing the net profit attributable to shareholders by the shareholders equity. [Investopedia, 2012] The ratio is quite essential from the investor’s point of view as it represents how well a company is earning on its shareholder equity, which mainly comprises of issued capital and retained earnings. The ROE of the company has increased during the financial year 2011 which is due to the fact that the net profit of Rolls Royce has increase by a staggering 170% as it increased from 848 million to 2,295 million. The main reason behind this increase in the net profit is one unusual item of 669 million which is due to the disposal of a segment of the business during the current financial year. It would also be worth mentioning that the sales and operating profit of the company has increased by 9.32% and 15.77% during the current financial year. These escalations in figures have further accentuated the return on equity during the current year. The ratio is better than the industry average which is a sign for positive financial outlook. The gross profit has increased marginally during the current financial year. The reason behind the marginal increase in the gross profit margin is the fact that

Microsoft and Antitrust Essay Example | Topics and Well Written Essays - 500 words

Microsoft and Antitrust - Essay Example I therefore agree that Microsoft attempt is one of gaining monopoly power in the software industry. The windows operating system and the internet explorer browser are completely different products that should not be bundled together (Evans, 2002). Microsoft decision is thus one that denies fair competition from other browsers and their restrictive licensing is monopoly intended. In a pure monopoly one firm has the complete control in the production of their products because of barriers of entries for other businesses. There is therefore no competition in the industry and the pricing is not based on the forces of demand and supply. I am against monopoly structure because it promotes inefficiencies and discourages competition. Consequently, monopoly products are of low quality and are highly priced hence encouraging consumer exploitation. In a monopoly, prices and quantity demanded is set at the point of intersection of the marginal revenue and marginal revenue curve. If the marginal cost cuts the marginal revenue curve from the lowest point possible, it means that the firm is operating at optimal capacity and there is no room for expansion and it is at this point that the profit is maximized (Fellner, 1949). Since the demand curve is downward sloping, a reduction in price is accompanied by a corresponding increase in the quantity sold. The firm is therefore the price marker and therefore records high economic profits. Monopoly also deprives consumers their sovereignty of choice, as there are no substitutes for the company’s products. Failure or conditions that can halt the production of a company’s products will therefore result in acute shortages. Monopoly pricing coupled with artificial shortages to the society will result into dead weight loss to the society (2009). The locative inefficiencies in monopoly lead to loss by the society. Moreover, monopolies have been