It is a collection of experts who advise other groups. Stockholders and investment analysts will advise shareholders, trade union advisers will advisers will advise employees, government statisticians will advise the government, and so on. The needs of the analyst-adviser group are obviously essentially the needs of particular group they are advising.
However, being advisers and presumably experts they will need more detail and more sophistication in the information presented to them.Those information is provided in the annual report. The business contact group This group consists of suppliers, trade creditors, customer, competitors and business rivals. Suppliers and trade creditors need information, which are shown on the balance sheet and notes to the account, that is the same as those short-term loan creditors. A closed relationship with suppliers ensure that the delivery of our policies on the product quality and integrity, health and safety, and the environment.
Customers and competitors need information related to reliability, effectiveness, efficiency as much as possible about the financial, technical and marketing structure of the business. Those information are provided in the annual report as a whole. For more detail, the Group is seeking to earn the loyalty of customers by providing safe, wholesome food and environmentally friendly appliances and services, and by achieving legendary standard of customer service.The services provide real assistance to the elderly, disabled and families with young children who find it difficult to travel to stores. The government This group just composed of one party – Government, but it may deeply divided into several sub-department such as Inland Revenue, HM Custom & Excise, Statistic Office, Local or Central Government.
The information required are the financial information of Iceland Group plc. Those information are used for tax purposes are shown in the balance sheet, profit and loss account and cash flow statement.The public This public group consists of taxpayers, ratepayers, consumers and other community and special interest group. They are interested in the profitability, solvency and creditability of the company. Besides, they may be concern at employment, pollution and health and safety. Moreover, they may be interest in energy usage, effective use of subsidies, dealings with foreign governments and contributions to charities in money or kind and all of them can be found in the Iceland Group plc’s annual report.Analyse the company’s choice of capital structure and discuss any relevant implications of this on the providers of this capital.
The company’s choice of capital structure can be measured by gearing ratio: It is a method of comparing how much of the long-term capital of a business is equity and how much is prior charge capital which is entitled to receive interest or dividends before ordinary shareholders. On other words, capital gearing is concerned with the relative sizes of the finds provided by shareholders, on the one hand, and by loan creditors on the other.The following is the measurement of capital structure be using the gearing ratio which is shown as following:The long term loan can be found from the net debt and funding of operating and financial review of the first part of the annual report of Iceland Group plc. That is the figure given above 168,000,000 .
The shareholders fund can be found out either from the balance sheets or notes to the accounts of the second part of the annual report of Iceland Group plc. That is the figure shown above 217,600,000. Then divided the long term loan (168,000,000) by shareholder fund (217,600,000) multiplied by 100%.Thus the answer is 77. 21% which is the same as the figure 77% disclosed to us on the part of operating and financial review. The net group debt at the year end was 168,000,000 with gearing down to 77% in 1999 compared with i?? 180,000,000 debt and 95% gearing in 1998.
These figures were in line with projections, and have been achieved despite additional investment of 20,000,000 in the Enfield distribution center and 11,000,000 on the acquisition of Deep Freeze Supplies Limited as part of the planned expansion of our Woodward Foodservice operation.The gearing ratio concerns with the long term capital structure of Iceland Group plc. From the figure we get, which is 77%, we can sure that there is a high gear in Iceland Group plc. What does it mean? The calculated high gearing ratio represents there is a high loan proportion in respect of the shareholders funds. In other words, when a company or plc being asked by their creditors, they need reimbursing their debt immediately. But they may not have enough capital for this reimbursement.
Therefore, the company or plc may face a risk of bankrupt, closed etc.Eventually, a sale of shares to the creditors may be required in order to reimburse those loans. Although they have enough money for reimbursing the loans, the money they have paid to their creditors will also reduce the funds that retained in the plc. As a result, this will come up with a negative effect on the price of share in the stock exchange market. That is a decrease in price.
It is because, the financial environment of a plc should be disclosed to the public, the more the lacking of money on a plc, the more the bad reputation it is. Thus the price of the share will decrease.