Reference no: EM132287678
Analyze the purpose for developing and presenting financial information
Learning Outcomes: Analyze the purpose for developing and presenting financial information
Task Summary
Job Description
You are the Assistant Accountant of Fast Cars Limited, an automobile manufacturing company based in Sultanate of Oman. Your responsibility is to oversee the management accounting function for Fast Cars Limited and assist Mr. Chris Paul the Finance Manager in drawing up costs and advising on new and existing projects, as required.
Company background
Fast Cars Limited was established in 2003 by automobile engineer, Dr. Robert with 50 employees and 1 factory in Oman. The objective was to engineer and build Oman's first truly home-grown automobile and the result was the launch of ‘Pride' which was completely designed and made in Oman.
The first National Automobile was thus launched in 2003 winning an international patent for its unique design. The demand and acceptance for 'Pride' amazed the country but the production constraints deprived Fast Cars Limited of meeting the escalating demand.
The company developed a low-cost manufacturing and assembly operation that could produce high quality vehicles utilizing the resources and labour force of Oman. Today Fast Cars Limited remains the only national car manufacturer, assembling a full range of vehicles, from Compact Cars and Vans to Luxury SUV's, Buses and Prime Movers.
Fast Cars tied up with a well-known automobile giant in 2010 and began to manufacture SUV to cater to local and international markets. This led the company to compete shoulder to shoulder with other leading global brands
Fast Cars ventured into overseas market by exporting vehicles into most of the neighbouring countries. And further opened the after-sales service centres in Oman and Qatar to cater the demand of the ever-expanding market share.
The automotive industry is also one that relies heavily on supply chains and procurement. Fast Cars Limited relies on third party manufacturers locally and internationally to supply small components like rubber bushings and spark plugs to complicated devices like touchscreen infotainment systems and anti-lock braking systems, and a huge variety of other components.
Business Opportunities.
During the management meeting held on 09th March 2019 the chairman had informed that
• due to the increasing demand the company should look in to the feasibility of setting up two more manufacturing plants in overseas.
• Recruiting of efficient marketing team to cater to each region and recruiting of skilled labour force to work on proposed manufacturing plants.
Mr. Chirs Paul, the Finance Manager requested the management to look in to the recruitment of staff to finance department. But the chairman was reluctant to provide priority to finance team and he further added that ‘finance department and financial information is secondary to the development of Fast Cars Limited'.
Financial Data
Following actual financial data collected from the annual report of Fast Cars Limited for the year ended 31st December 2018
|
Description
|
OMR 000
|
|
Land & building (NBV)
|
13000
|
|
Cash & cash equivalent
|
1000
|
|
Total sales revenue
|
15000
|
|
Account receivables
|
3000
|
|
Account payable
|
4400
|
|
Cost of goods sold
|
6400
|
|
Closing stock
|
2500
|
|
Tax payable
|
500
|
|
Administration expenses
|
2200
|
|
Distribution expenses
|
1500
|
|
Interest expenses
|
500
|
|
Tax expenses
|
900
|
|
Accrued wages
|
100
|
|
Bank overdraft
|
400
|
|
Additional paid in capital
|
3500
|
|
Retain earning as at 01/01/2018
|
8300
|
|
Pre-paid expenses and other current assets
|
300
|
|
Machinery and equipment (NBV)
|
8700
|
|
Motor vehicles (NBV)
|
5500
|
|
Time deposits
|
200
|
|
Long term debt
|
3000
|
|
Other accrued expenses payable
|
300
|
|
Common stock
|
10200
|
After the management meeting the Finance Manager approached you and discussed the viewpoint of the chairman about finance department and accounting information. Requested you to help him in constructing a report discussing the critical importance of accounting information to the Fast Cars Limited's various types of stakeholders.
Requirement:
As the Assistant Accountant of Fast Cars Limited, you are required to prepare a report addressing to Financial Manager by,
Critically evaluating the purpose and presentation of financial information from the perspective of different stakeholders of Fast Cars Limited by addressing the reason for the development and appropriate presentation of financial information to support financial planning and decision-making.