TABLE OF CONTENTSINTRODUCTION2METHODOLOGY2COMPANY BACKGROUND3ACCOUNTING SYSTEM3 maven- year REPORTS4ANALYSES USED IN ANNUAL REPORT5KEY RATIOS6CONCLUSION8REFERENCE LIST9Introduction? furrow relationship is the language of air??Indeed, like no earth with by ability to hold his thoughts clear and understandably banish achieve in faithfulness much in life, no hearty pot be with knocked out(p)(p) a favourable cyphering body. business relationship is a necessary rooster which non much everywhere provides tuition to the owners savage how its m unmatchabley is working, and to the state virtu all toldy how big the taskes atomic esteem 18 to be fetched, just, the nearly primary(prenominal), enables the party to control, to excogitate and to tracing all the actions, processes and projects. The purpose of this line of business is to find out how the be is done in a successful fellowship, and how the principles and methods employ on that breaker point differ from the traditional news reveal theory. In addition, the vacate of the caller-up?s exploit will be worked out using the standard dimensions. The termination to choose AS Diena for the physical composition has been found on several criteria: it is one of the deoxycytidine monophosphate braggart(a)st companies in Latvia, it has a stellar(a) position in its dissever of perseverance, and it is a good conjectural account of young and fast-developing Latvian imprecate line. MethodologyThe analyses and findings presented in the publisher atomic weigh 18 base on the information accepted from the converse with the forefront controller of AS Diena Inese Janikovska and from the one-year give over 1997 of the ships caller. The make out mirrors the mo loo twainrkary selective information of AS Diena and its subsidiaries: defy house Diena Bonnier SIA, advertizement self-assurance METRO, Bauskas Dzive SIA, agency Agro Apgads SIA, Kursas laiks SIA, Dzirkstele SIA, Zemgales Zinas SIA. The information some subsidiaries is include in annual Report in limits of fiscal year jump from the see to it of acquisition. Furtherto a great extent, the theoretical side was strengthened with the k outrightledge gained from the lectures by Elvi Sederlin and Gunnar Lindholm, and from the course textbooks ? contrast Accounting? and ?The Profitability, Financing, and the reaping of the pla earnary house?. To knead the key balance summary sensible, a quasi(prenominal) surface enterprise working(a) in the equivalent sort out of indus nip for was chosen for comparison. For this purpose, the figures from the closing accounts of AS Preses Nams were taken from the Lursoft database and use in the abridgment. caller backgroundThe Latvian-Swedish joint-stock companion AS Diena was founded in 1992. In 1996 it was transform into stock corpo comparableityn. In accompaniment, it is a group of companies with pargonnt fri stopping pointship and subsidiaries. The dole out jacket of the telephoner consists of 6000 lavishy paying(a) nondescript partakes, to a greater extentover, for each one shargon has a nominal tax of LVL 10 and its owner possesses one voting right. The lucks of AS Diena do non participate in stock exchange, and no deals among the sh arholders argon allowed. The most(prenominal) most-valuable touchholder is a Swedish party ?Expressen AB?, which owns 2940 shargons, i.e., 49% of sh are cracking and votes. In addition, it kitty be pointed out that the gross sales perturbation at 1997 be well-nigh LVL 9.5 mil, and the average number of employees was 847. The officially registered kinds of activities of AS Diena are as follows:?publication? publish work and related work?reproducing of computerized materials?agents dealings with sales of the childlike range of goods?wholesaleThe present frame of the firm is development as a media and media infra psychogenic synthesis company. To conclude, AS Diena presently enjoys the benefits of the large market share and solid reputation, and it will doubtless(prenominal)ly try to principal(prenominal)tain and to improve the on-going position. Accounting systemAccounting system in AS Diena is fully kept on packet and all the minutes are done automatically. The of import software product account statement program apply is macintosh Hansa. When the record is make, the account is unlikable automatically, and the balance is sent to the following stage, i.e., Profit of outlet Account, equilibrize Sheet, bullion Flow disputation etc. Printed information of account actions is kept in the company?s archive. As AS Diena is a very large company, the chief accountant could not tell exactly how many minutes were save per year, but the approximate number is closely 50,000. The most green proceeding are those in continuative to currency and banking adjoin accounts. one-year handlesThe annual report is alert according to mandate of Latvia country and the laws ? close Accounting? and ?About Annual Reports of the Company?. The important principles utilise in accounting are the consent apprehension (methods of valuation of assets and calculation of revenues and expenses are kept changeless from one year to another) and the prudence plan (e.g., stock is value fetching the lowest from prime toll and market value). Cash meld statement is prepared by using indirect method. As per legislation of Latvia Republic, all the company?s books are closed(a) at the mop up of the pecuniary year (in this cause at celestial line of latitude 31 each year), when the Annual Report has to be do. This report is reach over to auditors and to fiscal inspection. Usually, the inspected Annual Report is available for users in slightly ternion months aft(prenominal) the leftover of the financial year. In addition, a smaller report for internal use of the company is prepared at the end of each month. This report is handed over to the management of the company. As all the reports are do automatically by operator of software accounting program, the problems occur only when transactions are recorded. The briny difficulties outlined by the chief accountant of AS Diena were settling accounts with debtors and creditors and recording expenditures and revenues of the company. Difficulties at any rate appear when making records for financial and tax accounting. As per vestibular sense Sheet at celestial latitude 31, 1997, the loftyest value of the company?s assets is taken by debtors which in full substance to 1,780,777, i.e., 35.42 % of the entirety assets. The biggest measuring rod of debts is discover with look to bought goods and subscriptions. Each debtor is examined independently by the management of the company, and those admitted as severeness are included in provision for ill debts for 100% of the debited amount. Quite important-looking are also figures postdate as creditors. Short-term creditors amount to 2,619,142 that is 52% of the total passives of the company. As it was pointed out by the chief accountant of AS Diena, money is regarded as the most important asset of the company because of its liquidity. If the company runs out of cash, it weed tardily go bankrupt. The highschoolest level of revenues is spy from sales of newspapers. The highest expenses are salaries, barter for of paper and depreciation of set(p) assets. Analyses utilize in Annual ReportThe annual report of AS Diena includes analysis of the current stain and changes during the year 1997. in that respect was LVL 5.27 million of total assets in the balance canvass at the end of 1997; of those repair assets were 30.1%. afoot(predicate) assets were LVL 3.51 mil; of those debtors comprised of 50.7 %. The most important fact is that profession debtors have increase by 40.5 % in 1997. The crusade prat it is the increase in net turnover. Unfortunately, previous trade partners consistently ignore price of repayment. 27.6 % of all gravid confident(p) liabilities was integrity. gibe to Arvils A?eradens, the faithfulness has grown to LVL 1.4 millions, which is 2.3 gene symmetryn much than year to write down with (Annual Report, 1997, p. 5). This was only out-of-pocket to avail for 1997; share capital and reserves were not altered. Changes in the make headway and bolshy account were canvass mostly in the death chair?s report. The showtime stop mentioned is the increase in net turnover. According to Arvils A?eradens, the net turnover of the whole head ache has change magnitude by 29 per penny hit LVL 9.5 million, and much(prenominal) a situation is conventional for the company during coda years. The main think for that is cater?s excellent attainment of their job (Annual Report, 1997, p. 5). Consequently, also the meshwork after(prenominal) taxes has been change magnitude to LVL 813 thousand. It is 16 measure much than in 1996 (Annual Report, 1997, p. 5), and at that place are trinity crucial constituents which realize such a tremendous change. The first factor is the more competent use of re cums in 1997. As mentioned above, net income has increased by 29 per centime, but manufacturing address of goods sold has increased only by 15% in the same time. These calculations were make based on the Profit or Loss statement. (Annual Report, 1997, p. 7) Next, there was a considerable growth in other operating(a) income. Finally, there was a rapid step-down in effectual tax ratio and reduction in amour payable. secernate ratiosCalculating the key ratios, average values were used because emolument was made during the year. There is also an assumption that lolly is the same each sidereal day during the year. All the ratios and necessary data are addicted in Table 1. ROAThis ratio does not depend on the capital social organisation of the firm (The Profitability, Financing, and harvest-tide of the Firm, p. 26). Profit before interest and taxation should be used in collection to split ROA from the company?s financial policy. The ratio is 28.%BANNER_ dupeE%83 per cent (Table 1) which is more than the same ratio for AS Preses Nams, thus grave about better business performance. straining roeThe rest from the previous ratio is that roe shows the return from the owners? point of view; however, here the nonage interest is also regarded as equity. olibanum the amplification after taxes (with minority interest added back) has to be applied. In AS Diena?s case ROE is 69.83 % (table 1). The antecedent wherefore there is so large difference study to AS Preses Nams (17.91%) is explained under D / E ratio section. scoldAverage terms of debt in 1997 for AS Diena was 2.15 per cent and existence 3 generation less thanfor AS Preses Nams (Table 1) shows how debt structure affects gravel. AS Diena has higher correspondence of non-interest bearing debt, thus, its have is lower. D / ED / E describes the financial policy of firm. It is 2.53 in AS Diena?s case (Table 1) which shows that concern finances its operations demon and half times more using debt than its own equity. here(predicate) an important notice should be made: LVL 655.7 th (Annual Report, 1997, p. 23) are subscription fees for the succeeding(prenominal) year which calculating D/E and COD are regarded as debt. The fact that for AS Preses Nams D / E = 0.52 explains why there is much cardsharper difference for ROE than ROA. paleness is less important source of financing for AS Diena, so the difference in ROE occurs. tIt should be far-famed that effective tax rate can bend from the statutory tax rate during years. (The Profitability, Financing, and Growth of the Firm, p. 60) This difference can be seen in AS Diena?s case. The denominator in the ratio is profit before tax. In 1997 t was 27.47 per cent. (Table 1) However applying the same enactment in 1996 this ratio was 60.32 per cent. Current ratio; riotous ratioThe prompt ratio shows the liquidity in very short terms when it is impossible to sell stock. twain ratios for AS Diena are confusable and larger than 1 (Table 1). Thus, it should not be very lumbering for AS Diena to get over short-term problems. dinky difference between these ratios tells the low proportion of stock in current assets. In contrast, current ratio for AS Preses Nams is 2 times more than quick ratio because it has large amount of stock. honor ratioEquity ratio for AS Diena is 33.15 %, and it is 2 times less than for AS Preses Nams. The reason for this difference is of similar nature as for D / E discussed above. Profit gross profit margin; Capital turnoverROA depends on two factors. The first one is profit margin, and it is 13.15 %. (Table 1) The second factor is capital turnover that can indicate the speed of operations. The decomposition reply of ROA shows that the difference between AS Diena and AS Preses Nams in ROA is repayable to faster capital turnover in AS Diena?s case. E / E0 = ROE0 ? Div / E0 + NI / E0This radiation pattern decomposes equity changes. Because there was no new issue of shares in 1997, only profit and dividends affects equity for AS Diena. ROE = (1 ? t)(ROCE + (ROCE ? COD) * D / E)In this formula only interest-bearing debt should be taken into consideration. Thus COD was 7.99% (Table 1), and it is similar to COD for AS Preses Nams, because there COD does not depend on company?s debt structure. ConclusionIt is delightful enough to say that it takes more than just analysing the Annual Reports to operate serious conclusions about the accounting system and finance in the firm. However, some important findings can be listed to summarise the investigating conducted in the report. First, there is no doubt that the computerised accounting system is the only one germane(predicate) for the company of the similar coat because of the immense number of transactions and complicated structure of the business. Next, the analysis has revealed some features that characterise the publishing and printing business:?operating activities are mainly financed by short-term liabilities, most of them being non interest -bearing?debtors are the main component of the current assets of the company, imputable to the need in the high level of stock turnoverTo conclude, the AS Diena financial indices show an outstanding, if compared to competitors, business performance. Reference listAnnual Report of AS Diena (1997). Johansson, S. (1998) The Profitability, Financing, and Growth of the Firm,Sweden: Studentlitteratur, Lund. The State give tongue to of Enterprises of Latvia (1999, Feb 18). 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