What can you tell about a company just by their accounts?
Discussion
Doing a little project and interested if anyone is good at looking at a companies annual accounts report and how that can paint a picture in terms of growth, profit, assets etc.
The company is a haulage company, and it has a few sub companies with this parent company. Pics below show the main account performance for last financial year.
Is this a healthy company? And what else can you spot, just looking at numbers?
Thanks!
The company is a haulage company, and it has a few sub companies with this parent company. Pics below show the main account performance for last financial year.
Is this a healthy company? And what else can you spot, just looking at numbers?
Thanks!
As a non-accountant I always feel that I dont really trust published accounts - I'm sure the experts can hide a lot in them.
Stand out points would be in the cash flow - big increase in debtors and decrease in creditors.
Also valuation of land.
I'm interested to hear what the experts pick out.
Stand out points would be in the cash flow - big increase in debtors and decrease in creditors.
Also valuation of land.
I'm interested to hear what the experts pick out.
Drew106 said:
Are you trying to get someone to do your homework? Looks like it could be an ACCA exam Q.
You can tell quite a lot, but I no longer have exams to do, so I'll not do it for free
I have a very secure job and a good pension, and I am thinking of applying for a job with this company. I'm a little bit afraid of the risk - the company is in Northern Ireland where I live, and with Brexit looming, as well as the fact that they are Haulage, with business in NI and GB, I would be taking a leap of faith. But the caveat, I think I really need a change of work. I can't really progress with my current employer unless I move to England, but I've 2 young kids in school so that's not an option. The company above is just down the road from where I live.You can tell quite a lot, but I no longer have exams to do, so I'll not do it for free
I'm a risk adverse person, which is why I'm interested in how 'healthy' they look on the surface.
Add in the fact that if I can go in to the interview looking 'knowledgeable' then that always helps too
Eric Mc said:
Sales up - Gross Profit margin down. Not a good sign.
Is this company part of a group?
Are there any inter group transactions such as Management Charges?
If there are, how are they being accounted for?
This is the group accounts, 7 or 8 businesses underneath - I would need to look into the separate accounts too.Is this company part of a group?
Are there any inter group transactions such as Management Charges?
If there are, how are they being accounted for?
Yes - good growth on the surface but what about the profit margin indeed. Fuel has been a massive cost burden of late, and won't even be in these accounts as these were last year. Fuel price growth for that financial year wasn't as substantial as this current year so whats eroding the margin for that year and how bad will it be this year is a concern.
I'll do some sums on the wage growth and try and work in some other inflationary pressures they might have faced.
Questions I have for them is how much inflation are they maybe trying to absorb into their pricing and why? I guess its very competitive out there right now too.
Minimal intangibles, strong cash reserves and they have trimmed their administrative expenses whilst enabling growth. Yes, you can't immediately identify if their pricing strategy has increased their turnover or if it is a genuine upturn in business, but I would consider they seem to be absorbing fuel costs, for instance, quite well if that is a big concern. Bearing in mind a company of any scale would have a futures strategy for fuel and currency, limiting their exposure to short term fluctuations.
You could argue they have an increasing reliance on their debtors, and could be considerably exposed to any failures down the chain, but that is likely just the industry and the payment terms.
I certainly wouldn't consider these accounts offputting but note, these are March 17 accounts, March 18 accounts would give better insight and are due shortly.
You could argue they have an increasing reliance on their debtors, and could be considerably exposed to any failures down the chain, but that is likely just the industry and the payment terms.
I certainly wouldn't consider these accounts offputting but note, these are March 17 accounts, March 18 accounts would give better insight and are due shortly.
Eric Mc said:
Sales up - Gross Profit margin down. Not a good sign.
Entirely normal for this type of business. And often this type of business will use outsourced providers so there might be costs moving between "cost of sales" and "admin expenses" which could actually be very similar activities.To the OP, I'm not an accountant, but I wouldn't be concerned about applying for a job to this company based on the accounts you have posted.
There is always a risk when you move to a new employer, but if you are attracted to the role and you feel it would be worthwhile and interesting, I would say go for it.
JIMMYJ4ZZ said:
Minimal intangibles, strong cash reserves and they have trimmed their administrative expenses whilst enabling growth. Yes, you can't immediately identify if their pricing strategy has increased their turnover or if it is a genuine upturn in business, but I would consider they seem to be absorbing fuel costs, for instance, quite well if that is a big concern. Bearing in mind a company of any scale would have a futures strategy for fuel and currency, limiting their exposure to short term fluctuations.
You could argue they have an increasing reliance on their debtors, and could be considerably exposed to any failures down the chain, but that is likely just the industry and the payment terms.
I certainly wouldn't consider these accounts offputting but note, these are March 17 accounts, March 18 accounts would give better insight and are due shortly.
Thanks for that, and an interesting point about futures for fuel and currency - something I know little about. Is this the same as 'hedging' or a bit different than that?You could argue they have an increasing reliance on their debtors, and could be considerably exposed to any failures down the chain, but that is likely just the industry and the payment terms.
I certainly wouldn't consider these accounts offputting but note, these are March 17 accounts, March 18 accounts would give better insight and are due shortly.
soupdragon1 said:
Thanks for that, and an interesting point about futures for fuel and currency - something I know little about. Is this the same as 'hedging' or a bit different than that?
Hedging would be offsetting risk with a financial instrument - generally seen as taking an opposite position, but this is not always true.
Futures are basically an off the shelf product traded on an exchange (e.g. ICE - like a shop for financial instruments) and have some limited variables based on quantity and time - this is what would be used for hedging the fuel.
Though, not all futures instruments are used for hedging - some may be used for speculation but this is a whole different ball game and accounting principle.
For currency risk you could do similar, or you may look to enter into a bespoke derivative product with a provider, such as a forward swap, that enables you to lock in a price you would pay for a currency at a certain point in time. But this is an 'Over The Counter' product (i.e. bought direct from the supplier) not from an exchange.
Just to build a little bit more on why I'm looking at this.
The job role I would be entering would be heavy data analysis, turning that into meaningful business insight. Creating performance monitoring tools, like dashboards, that type of thing. It will involve forecasting, and supporting how we price contracts. Its also about eliminating waste from the business.
For example - what I would propose to them in terms of benchmarking company performance is that the main income driver of the business is the trucks - its a haulage business, so the trucks create the revenue. That's the simple bit.
Translating what I do in my current job and applying that to this company, a different type of business, I would look at the annual cost of running that truck, (lease, maintenance etc) but also all the fixed costs of the business - rates, electric, office payroll - all the 'fixed' costs that don't change no matter how little or how much work they do. I take all those fixed costs, add them together for the annual cost. Then divide that by 365 days - that's the fixed costs of the business, so we'll apportion that out to each income generator, ie, each truck. I'll have a figure that says trunk No29 costs £95 per day to own for example.
That gives me the fixed daily cost of running the business, including the truck. Then I'll add the variable costs to that - ie, the drivers payroll and the fuel. That should in theory, tell me what the break even point is so that when pricing, the whole operating costs of our business are reflected in each pricing job - not just the truck, fuel and the drivers payroll.
That then brings me to frequency - if the contract is delivering high frequency use of the truck, then its generating more income. The truck is the main asset, so how hard is that asset working? If the trunk is parked up 40% of its time in a calendar year, then its an asset that isn't delivering maximum income. So I create a forecast for that piece of work to work out the overall expected profit. High margin doesn't necessarily mean maximum profit if the frequency is poor - so its creating tools so show how well that's balanced in the business.
So that's what I sort of do, and that's what I'm good at (well, at least I think I am, feel free to pick the bones from the above statement!)
What I'm not good at is reading that financial statement to see if I'm on the right track and also, to see if the company is worth joining.
It would be an added bonus to go to the interview and showcase how I can turn numbers into meaningful insight as that's what I'm good at - the unfortunate thing is I don't know how to read these statements properly as I don't have that skill. But if I knew how to read it, then I could showcase them some examples of how I can turn numbers into business insight.
One thing I can see though, is see that their pension offer to staff looks miserly lol
The job role I would be entering would be heavy data analysis, turning that into meaningful business insight. Creating performance monitoring tools, like dashboards, that type of thing. It will involve forecasting, and supporting how we price contracts. Its also about eliminating waste from the business.
For example - what I would propose to them in terms of benchmarking company performance is that the main income driver of the business is the trucks - its a haulage business, so the trucks create the revenue. That's the simple bit.
Translating what I do in my current job and applying that to this company, a different type of business, I would look at the annual cost of running that truck, (lease, maintenance etc) but also all the fixed costs of the business - rates, electric, office payroll - all the 'fixed' costs that don't change no matter how little or how much work they do. I take all those fixed costs, add them together for the annual cost. Then divide that by 365 days - that's the fixed costs of the business, so we'll apportion that out to each income generator, ie, each truck. I'll have a figure that says trunk No29 costs £95 per day to own for example.
That gives me the fixed daily cost of running the business, including the truck. Then I'll add the variable costs to that - ie, the drivers payroll and the fuel. That should in theory, tell me what the break even point is so that when pricing, the whole operating costs of our business are reflected in each pricing job - not just the truck, fuel and the drivers payroll.
That then brings me to frequency - if the contract is delivering high frequency use of the truck, then its generating more income. The truck is the main asset, so how hard is that asset working? If the trunk is parked up 40% of its time in a calendar year, then its an asset that isn't delivering maximum income. So I create a forecast for that piece of work to work out the overall expected profit. High margin doesn't necessarily mean maximum profit if the frequency is poor - so its creating tools so show how well that's balanced in the business.
So that's what I sort of do, and that's what I'm good at (well, at least I think I am, feel free to pick the bones from the above statement!)
What I'm not good at is reading that financial statement to see if I'm on the right track and also, to see if the company is worth joining.
It would be an added bonus to go to the interview and showcase how I can turn numbers into meaningful insight as that's what I'm good at - the unfortunate thing is I don't know how to read these statements properly as I don't have that skill. But if I knew how to read it, then I could showcase them some examples of how I can turn numbers into business insight.
One thing I can see though, is see that their pension offer to staff looks miserly lol
soupdragon1 said:
For example - what I would propose to them in terms of benchmarking company performance is that the main income driver of the business is the trucks - its a haulage business, so the trucks create the revenue. That's the simple bit.
Translating what I do in my current job and applying that to this company, a different type of business, I would look at the annual cost of running that truck, (lease, maintenance etc) but also all the fixed costs of the business - rates, electric, office payroll - all the 'fixed' costs that don't change no matter how little or how much work they do. I take all those fixed costs, add them together for the annual cost. Then divide that by 365 days - that's the fixed costs of the business, so we'll apportion that out to each income generator, ie, each truck. I'll have a figure that says trunk No29 costs £95 per day to own for example.
That gives me the fixed daily cost of running the business, including the truck. Then I'll add the variable costs to that - ie, the drivers payroll and the fuel. That should in theory, tell me what the break even point is so that when pricing, the whole operating costs of our business are reflected in each pricing job - not just the truck, fuel and the drivers payroll.
That then brings me to frequency - if the contract is delivering high frequency use of the truck, then its generating more income. The truck is the main asset, so how hard is that asset working? If the trunk is parked up 40% of its time in a calendar year, then its an asset that isn't delivering maximum income. So I create a forecast for that piece of work to work out the overall expected profit. High margin doesn't necessarily mean maximum profit if the frequency is poor - so its creating tools so show how well that's balanced in the business.
So that's what I sort of do, and that's what I'm good at (well, at least I think I am, feel free to pick the bones from the above statement!)
What I'm not good at is reading that financial statement to see if I'm on the right track and also, to see if the company is worth joining.
It would be an added bonus to go to the interview and showcase how I can turn numbers into meaningful insight as that's what I'm good at - the unfortunate thing is I don't know how to read these statements properly as I don't have that skill. But if I knew how to read it, then I could showcase them some examples of how I can turn numbers into business insight.
One thing I can see though, is see that their pension offer to staff looks miserly lol
Just an aside, as I don't want to distract your thread from your main question, but in your example, you are basically saying you would concentrate on getting the trucking company to use their trucks more efficiently by showing them how efficiently they are used. Translating what I do in my current job and applying that to this company, a different type of business, I would look at the annual cost of running that truck, (lease, maintenance etc) but also all the fixed costs of the business - rates, electric, office payroll - all the 'fixed' costs that don't change no matter how little or how much work they do. I take all those fixed costs, add them together for the annual cost. Then divide that by 365 days - that's the fixed costs of the business, so we'll apportion that out to each income generator, ie, each truck. I'll have a figure that says trunk No29 costs £95 per day to own for example.
That gives me the fixed daily cost of running the business, including the truck. Then I'll add the variable costs to that - ie, the drivers payroll and the fuel. That should in theory, tell me what the break even point is so that when pricing, the whole operating costs of our business are reflected in each pricing job - not just the truck, fuel and the drivers payroll.
That then brings me to frequency - if the contract is delivering high frequency use of the truck, then its generating more income. The truck is the main asset, so how hard is that asset working? If the trunk is parked up 40% of its time in a calendar year, then its an asset that isn't delivering maximum income. So I create a forecast for that piece of work to work out the overall expected profit. High margin doesn't necessarily mean maximum profit if the frequency is poor - so its creating tools so show how well that's balanced in the business.
So that's what I sort of do, and that's what I'm good at (well, at least I think I am, feel free to pick the bones from the above statement!)
What I'm not good at is reading that financial statement to see if I'm on the right track and also, to see if the company is worth joining.
It would be an added bonus to go to the interview and showcase how I can turn numbers into meaningful insight as that's what I'm good at - the unfortunate thing is I don't know how to read these statements properly as I don't have that skill. But if I knew how to read it, then I could showcase them some examples of how I can turn numbers into business insight.
One thing I can see though, is see that their pension offer to staff looks miserly lol
That's like telling an airline their profitability is based on the seat factor and the aircraft utilisation. They will already know that.
New tools that help the optimisation process could be useful. But you will find much of the "inefficiency" is driven by customer demand and trade flows which are difficult to influence.
TooLateForAName said:
As a non-accountant I always feel that I dont really trust published accounts - I'm sure the experts can hide a lot in them.
Stand out points would be in the cash flow - big increase in debtors and decrease in creditors.
Also valuation of land.
I'm interested to hear what the experts pick out.
Isn't the balance sheet the only document that's very difficult to be 'creative' with?Stand out points would be in the cash flow - big increase in debtors and decrease in creditors.
Also valuation of land.
I'm interested to hear what the experts pick out.
Almost certainly the company will be using it's trucks efficiently. They may well be parked up 40% of the year, because that's the law. Drivers hours prevent them being used more.
Not wishing to distract from your original question, but your post above is not something I would employ someone to do. That is a combination of jobs. The Transport Manager should be able to tell you most of what is in your post, and the Accountant the rest.
By the way, if it's McCulla, steer well clear. I worked for them for a couple of months back in the 90s. What a horrible firm to work for.
Not wishing to distract from your original question, but your post above is not something I would employ someone to do. That is a combination of jobs. The Transport Manager should be able to tell you most of what is in your post, and the Accountant the rest.
By the way, if it's McCulla, steer well clear. I worked for them for a couple of months back in the 90s. What a horrible firm to work for.
EddieSteadyGo said:
Just an aside, as I don't want to distract your thread from your main question, but in your example, you are basically saying you would concentrate on getting the trucking company to use their trucks more efficiently by showing them how efficiently they are used.
That's like telling an airline their profitability is based on the seat factor and the aircraft utilisation. They will already know that.
New tools that help the optimisation process could be useful. But you will find much of the "inefficiency" is driven by customer demand and trade flows which are difficult to influence.
You could well be right, I don't know. They advertised looking for someone who can get into the detail of their spends and operations, reducing waste, supporting new contracts. I've no idea what tools they have - all I can offer is what I can offer - whether they already have what I can offer, I'm really not sure to be honest.That's like telling an airline their profitability is based on the seat factor and the aircraft utilisation. They will already know that.
New tools that help the optimisation process could be useful. But you will find much of the "inefficiency" is driven by customer demand and trade flows which are difficult to influence.
Building on that point - I know its basic stuff - the bit is around the actual tool itself. Its turning those basics into automated tools that show weekly performance, by category, by customer for example. The same tools can be used for pricing jobs - where instead of building a price from the ground up, you're just keying in driver hours, ferry costs and mileage for example, and total cost to the business is worked out. Its the eye for detail I think they are mostly after. Eg, variable cost such as fuel per mile and driver cost per hour, average speed for route are the basics, but are we adding tyres and brakes per mile? - that type of thing -plus having the wit to cover the side elements, weighted averages for breakdowns, traffic delays, premium ferry rates and all that. Basically ensuring all elements of cost are considered and tracked correctly.
Building detailed benchmark KPI's so that we can do variance analysis, how we budget, but then how we flex the budget correctly - trend analysis. That's what I do in my current role and that's the type of thing I can offer. If they already have that - I guess I may look elsewhere
Tyre Smoke said:
Almost certainly the company will be using it's trucks efficiently. They may well be parked up 40% of the year, because that's the law. Drivers hours prevent them being used more.
Not wishing to distract from your original question, but your post above is not something I would employ someone to do. That is a combination of jobs. The Transport Manager should be able to tell you most of what is in your post, and the Accountant the rest.
By the way, if it's McCulla, steer well clear. I worked for them for a couple of months back in the 90s. What a horrible firm to work for.
Not McCulla Not wishing to distract from your original question, but your post above is not something I would employ someone to do. That is a combination of jobs. The Transport Manager should be able to tell you most of what is in your post, and the Accountant the rest.
By the way, if it's McCulla, steer well clear. I worked for them for a couple of months back in the 90s. What a horrible firm to work for.
I know what you mean around the drivers hours, and I've read up a little on CPC and that type of thing. Rather than the driver, its more around the actual truck itself - its the income generator so once a driver is out of hours, how soon have we got another driver into that lorry, maximising that expensive asset? If the wheels aren't turning, what is the reason they aren't they turning?
I perceive the role to be someone who can create tools to monitor and track performance, rather than come up with the practical solutions. Data analysis being used to generate questions to challenge the operation. The role is advertised as sitting between Finance and Operations.
If people think this is all basic stuff and will already be taken care of within the team then not much I can do about that. I can only offer what I can offer but it does appear from the advert, that this is what they are looking for.
Tyre Smoke said:
Almost certainly the company will be using it's trucks efficiently. They may well be parked up 40% of the year, because that's the law. Drivers hours prevent them being used more.
Not wishing to distract from your original question, but your post above is not something I would employ someone to do. That is a combination of jobs. The Transport Manager should be able to tell you most of what is in your post, and the Accountant the rest.
By the way, if it's McCulla, steer well clear. I worked for them for a couple of months back in the 90s. What a horrible firm to work for.
Not strictly true, drivers hours prevent the drivers from driving and working beyond certain limits. If you change the driver the truck can keep moving. Not wishing to distract from your original question, but your post above is not something I would employ someone to do. That is a combination of jobs. The Transport Manager should be able to tell you most of what is in your post, and the Accountant the rest.
By the way, if it's McCulla, steer well clear. I worked for them for a couple of months back in the 90s. What a horrible firm to work for.
When I worked in logistics, our trunking fleet (as opposed to multi drop) was running almost 24 hours a day, barring loading and unloading.
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