Finance and Accounts 1: Profit and Loss Account and the Balance Sheet - Activity

Details of the elements of a profit and loss account and a balance sheet for Vodafone plc for the year 2003 are given below. The blank table needs to be completed and the items of the profit and loss account put in to the table in the correct order. Some of the figures have not been given - to complete the table fully, you need to work them out!

Profit and Loss Account

Image reproduced courtesy of Vodafone

• Blank profit and loss account as a Word document
• Blank profit and loss account as an HTML page

Tax on profit on ordinary activities = -2956.0
Operating Profit =
Turnover = 30375.0
Equity minority interests = -655.0
Other costs/income = -161.0
Cost of Sales =
Gross Profit = 12479.0
Retained profit = -10973.0
Operating expenses = -17774.0
Profit before interest and taxation = -5456.0
Dividends =
Profit for the financial period = -9819.0
Net interest receivable/payable = -752.0
Profit on ordinary activities before taxation = -6208.0
Profit on ordinary activites after taxation =

• Once you have completed the table, comment on the financial position of Vodafone.
• How might you account for their financial position and what would you consider to be the prospects for the future of the company, given the position of the profit and loss account?

Once you have completed the profit and loss account, do the same thing with the balance sheet below.

Balance Sheet

Image reproduced courtesy of Vodafone

• Blank balance sheet as a Word document
• Blank balance sheet as an HTML page

Net Assets =
Other reserves = 99770.0
Profit and loss account = -27447.0
Equity shareholders funds = 128671.0
Cash in bank and at hand =
Tangible Assets = 19574.0
Debtors due within 1 year = 7460.0
Net current assets (liabilities) = -5702.0
Investments = 27030.0
Total Capital Employed =
Creditors: amounts falling due within one year = -14293.0
Called up share capital = 4275.0
Short term investments = 291.0
Creditors: amounts falling due after more than one year = -13757.0
Intangible assets =
Minority interests = 2863.0
Total fixed assets = 154689.0
Provisions for liabilities and charges = -3696.0
Total Assets less Current Liabilities =
Stock = 365.0
Share premium = 52073.0
Total Current Assets = 8591.0

Once you have completed the balance sheet, comment on the following:

• What is the asset structure of Vodafone (the relationship between fixed and current assets)?
• What does the balance sheet tell you about the capital structure of the business (the source of its funds for financing its operations)?
• What is the position of the working capital for Vodafone?
• In your opinion, does the balance sheet accurately reflect Vodafone's value?
• What are the limitations of a balance sheet in assessing the value of a company like Vodafone?

Extension Activity

Go to Biz/ed's Financial Ratio Analysis pages(http://www.bized.co.uk/cgi-bin/ratios/ratiodata.pl), and look at the profit and loss account for Morrisons the supermarket chain. Discuss the performance of the company over the two years highlighted in the accounts.