Business report of Zee company Essay Example | Topics and Well Written Essays - 1250 words

Business report of Zee company - Essay Example Zee Co. should also critically analyze the provisions of the purchase as stipulated by the English Dairy company. For instance, in the analysis report given to the Zee Company, it is clearly stated that the purchase of the company could be financed by two options; sales and lease back (1.4 million pounds head office) or by the bank loan that the merchant bank consented to provide upon agreement with the Zee company. The bank proceeded by giving their terms and conditions regarding the loan as 4% of the total purchase price and an additional 4,000 pounds for the arrangement fee. These information is suppose to help Zee company to brainstorm and come up with a sound decision which is financially a plausible in their attempt to make the purchase. Question 2 a The accounting ratios that were given by the English Dairy Company could be misleading because the ratios were calculated on the assumptions that favored the financial position of the English Dairy Company. ... The financial ratios given by the English Dairy Company could also be misleading in that the aspects of stockpile of the finished goods were not stated and if was stated then were quoted as sales. This gave a very impressive picture of the company’s performance which was fictitious. The key fundamentals involved in the calculations were hidden and this resonated by impressing Zee Company who by the time of purchase believed the report of the English Dairy Company as a honest financial position of the business. In regard of all these, Zee company was vulnerable for deception on grounds that not all the material facts were given to reflect and inform the buyer company to make choices that were sound. Question 2 b The published company’s accounts are entirely dependant on the good will of the company responsibility to report honest financial position of the business. Just because businesses clearly knows that it is the financial reports that are used to gauge the performan ce of the companies, they are always bound to fix figures regarding the business in order to create the feeling that the business is performing favorably. In most cases this may not be the case more so if the business is currently shopping for investors, loan or in the process of floating their shares. The financial reports of the businesses are normally corrected to suit the agenda that is moved by the company as at the time the report is required. In some other stretch, the financial reports of the companies are altered in the elaborate plan to evade tax payments. The need to relay the actual business position with regard to its finances has become an issue as business have been under legal obligation to