Scottish Power :: Business and Management Studies

Scottish Power Using examples from the annual report, explain how Companies Act legislation and other regulations influence the information contained therein. It is important for a business to create and maintain accurate financial records and to know about the different users of financial information. Every business has to meet internal and external reporting requirements to show its financial health and to meet legal and other requirements. The reasons why businesses therefore keep accurate records are: Â · Assessing its financial position - businesses assess their financial position every year so they know the business is making efficient use of resources to provide the necessary financial return to achieve a profit or suffered a loss. Businesses can find out if it as the ability to generate cash to ensure continued trading and to make dividend payments. This can be done by using figures from the profit/loss account and balance sheet to work out appropriate ratio such as acid test ratio, which shows the liquidity of the business. Â · Compare its performance with previous years - this can show businesses its future prospects and predict future trends to show profit and loss. Good records provide the financial data that help you operate more efficiently, thus increasing the profitability of your enterprise. This is because accurate and complete records enable you, or your accountant, to identify all your business assets, liabilities, income and expenses which, when compared to appropriate industry averages, help you pinpoint the strong and weak phases of your business operations over the years. The annual reports that I am going to use for this piece of work are from a well-established company Scottish Power. The predictable view of a company annual report and set of accounts is a glossy booklet, generally A4 size; there is an annual report in the appendices. The annual report is illustrated with photographs of the company’s directors and some of it activities, containing a chairman’s statement and other promotional or publicity material and extra material by a closely printed section carrying out complex and detailed financial data. The annual reports are for the year ending March 2004. Companies Act 1989 is to amend the law relating to company accounts; to make new provision with respect to the persons entitled for appointment as company auditors; to amend the Companies Act 1985 and certain other enactments with respect to investigations and powers to obtain information and to confer new powers exercisable to assist overseas regulatory authorities; to make new provision with respect to the registration of company charges and otherwise to amend the law relating to companies.[1] The relevant rules are in material form in the Companies Acts 1985 and