Amey Plc: UK's Leading Public Service Provider - Analysis
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1. Introduction: Amey Plc: Analyzing the History and Operations of the UK's Leading Public Service Company
Amey Plc is the most renowned public service company in the United kingdom. This company was discovered in 1921. Therefore, it provides, supports and manages various types of public and infrastructure services around the United kingdom. Amey Plc mainly works with defense, local government, aviation, central government, rail and highways and develops a support system. This company slowly generates efficiency in their work. They mainly work with the local services that help to grow their highway infrastructure. It also develops some fundamental management systems that create a large amount of services. The company mainly covers the transportation systems within Scotland and london.
Nowadays, the company also focuses on adopting rapid growth to enhance their productivity and business process. Through that way amey also gain various types of benefits that enable them to build their workforce. It also helps them to get various types of operating systems. The company also provides support to develop skills and various types of services. Through that way, amey also face different types of situations that help to overcome the risks. This company also built a mobicontrol solution. This solution has various types of solutions like device lockdown, easy-to-use as well as to give real time information. Therefore, it also gives help desk tools and centralized remote control systems (Corbetet al. 2019). Here some fundamental accounting theory also has been discussed. This theory helps to set the company positions. The basic accounting concept is mainly to generate some ideas that can assume the financial accounting practices. Therefore, the company also focuses on the accounting rules that can be applied. the organization additionally centers around taking on quick development to improve their efficiency and business process. Through that way amey likewise gain different sorts of advantages that empower them to fabricate their labor force. It likewise assists them with getting different kinds of working frameworks. The organization additionally offers help to foster abilities and different kinds of administrations. Through that way, amey likewise face various sorts of circumstances that assist to beat the dangers. This organization additionally assembled a mobicontrol arrangement. This arrangement has different sorts of arrangements like gadget lockdown, simple to-use just as to give ongoing data. Those concepts are business entity concept, revenue recognition concept, accounting concept, money measurements, cost and many more.
Business entity concept mainly assumes that a business has been separated from their owner. There are some purposes that develop a separation between owner and business. It also can make a liability to the owner. These things do not come under reporting as well as recording to the assets of the business (Bhattacharya et al. 2018). The owner also develops some personal transactions that help to involve the outflow and inflow the business funds. It also can be treated as a low rate of transactions that will help to withdraw their money. This concept also records some accounting view points. In the money measurement concept, it mainly shows the transactions that happen in the company. There are various types of terms and money related things that can be expressed through payments. These transactions can not be expressed through different types of monetary terms. There are other types of money measurement concepts that also generate some physical units to set some transactions. This also comes under sales of goods accounts and generates some income receipt.
The revenue recognition concept is mainly to generate some revenue to make transactions. The revenue mainly grows up to receive the service and goods within the company (Liang, 2018). The company also will be focused on the dividends as well as royalties to serve the revenue systems. It also generates some commission that helps to increase growth rate in the market.
2. Financial statements of Amey UK Plc
Liquidity ratio
Current ratio of Amey UK Plc in 2018
Current assets = 699184
Current liabilities = 994909
Current ratio = current assets / current liabilities
= 699184 / 994909
= 0.70
Current ratio of Amey UK Plc in 2019
Current assets = 760298
Current liabilities = 1118702
Current ratio = current assets / current liabilities
= 760298 / 1118702
= 0.68
Quick ratio of Amey UK Plc in 2018
Current assets = 699184
Current liabilities = 994909
Inventories = 21914
Current ratio = current assets - inventories / current liabilities
= 699184 - 21914 / 994909
= 0.68
Quick ratio of Amey UK Plc in 2019
Current assets = 760298
Current liabilities = 1118702
Inventories = 6071
Current ratio = current assets / current liabilities
= 760298 - 6071 / 1118702
= 0.67
A good liquidity ratio is mainly higher than 1. Here Amey UK Plc’s two years liquidity ratio has been discussed. A good current ratio is 1.2 to 2. In 2018, the current ratio is 0.70. On the other hand, in 2019, the current ratio is 0.68. Here the company did not get any profit in both of the year. The company’s quick ratio can be considered as 1. In the year 2018, the company’s quick ratio is 0.68. In the year 2019, the company’s quick ratio is 0.67. Therefore, the company also faced losses in both of the year.
Profitability ratio
Gross profit margin of Amey UK Plc in 2018
Revenue = 1883354
Cost of goods sold = 1502749
Gross profit margin = (Revenue - cost of goods sold) / revenue x 100
= (1883354 - 1502749) / 1883354 x 100
= 20.21
Gross profit margin of Amey UK Plc in 2019
Revenue = 2135116
Cost of goods sold = 1727178
Gross profit margin = (Revenue - cost of goods sold) / revenue x 100
= (2135116 - 1727178) / 2135116 x 100
= 19.11
The company needs to maintain 10 percent to 20 percent profit. 10 percent can be considered a healthy gross profit margin. Here, Amey UK plc’s two years of profitability ratio has been discussed. In the year 2018, the company’s gross profit margin is 20.21. In the year 2019, the company’s gross profit margin is 19.11. Here the company gained profit in both of the year.
Efficiency ratio
Asset turnover ratio of Amey UK Plc in 2018
Revenue = 1883354
Total assets = 1492330
Asset turnover ratio = Revenue / Total assets
= 1883354 / 1492330
= 1.26
Asset turnover ratio of Amey UK Plc in 2019
Revenue = 2135116
Total assets = 1253897
Asset turnover ratio = Revenue / Total assets
= 2135116 / 1253897
= 1.70
In the efficiency ratio, the asset turnover ratio’s normal range is 2.5. Here, Amey UK plc’s two years of efficiency ratio has been checked. Therefore, the company mainly focuses on setting a turn over ratio of 0.25 to 0.5. Then, in 2018, the assets turnover ratio for the year 2018 is 1.26. In the year 2019, the company’s assets turnover ratio is 1.70. Therefore, the company gained profit in both of the year.
Financial gearing ratio
Debt equity ratio of Amey UK Plc in 2018
Total debt = 1525154
Total equity = 32824
Debt equity ratio = total debt / total equity
= 1525154 / 32824
= 46.46
Debt equity ratio of Amey UK Plc in 2019
Total debt = 1308943
Total equity = 55046
Debt equity ratio = total debt / total equity
= 1308943 / 55046
= 23.78
In the financial gearing ratio it mainly comes within 25 percent to 50 percent. Lower than 25 percent is a risk among the lenders as well as the stakeholders. Here, Amey UK plc’s two years of financial gearing ratio has been checked. A good debt-equity ratio of around 1.5. In the year 2018, the company’s debt-equity ratio is 46.46. In the year 2019, the company's debt equity ratio is 23.78. Therefore, the company gained profit in both of the year.
3. Evaluation of cash flow statement of Amey UK Plc under indirect method
Using the indirect method of IAS-7, the cash flow statement of Amey UK Plc has been formed which begins from operating activities of cash flow. In this method, the operations start from the net income and in the year 2019, the net income of Amey UK Plc was 4340. From this value of net income, all the activities of operating are adjusted in the same year (Kumaresan,2019.). The depreciation for the year was valued as 14400 while the company has gained earnings by sale of plants worth 4800. In the same year, the insurance amount of 4500 was prepaid and also the value of inventory has been increased by 700. The value of accounts payable has been decreased to 2500 and in the same year the company received the income tax of 1800. All these operating expenditures and activities are adjusted from the value of net income in the year 2019 and give the net cash flow derived from operating activities as 13440. However the performance of Amey plc has been enhanced as compared to last year. In the year 2018, the value of net income of the company was 4230. The depreciation value for the year 2018 was esteemed as 12400 while the organization has acquired income by offer of plants worth 3580. Also in the financial year of 2018, the insurance of 3900 was paid ahead of time as prepaid and furthermore the worth of inventory has been expanded by 550 (Weetman, 2019). The worth of bills payable has been diminished to 2150 and in the same year the organization got the annual income tax of 1550. After adjusting all these activities of operations from the net income of Amey UK Plc in the year 2019, the net flow of cash derived from the operating activities was 12700. Therefore, it has been analyzed that the cash flow of Amey Plc from the activities of operating is improved in the year 2019 as compared to the previous year and the position of the company is yet more stable now.
Under the indirect method, the next part where the company focuses on is financing activities. In this area, all the activities related to the investment are recorded here and in the year 2018, the value of the plant has been expanded and becomes 2342. While the value of intangible assets is expanded to 11233 in the year 2018. Also the activities of property disposal, subsidiary acquisition and equity acquisition are considered in this investment related activities and valued as 1710, 11090 and 35154 respectively. The company also paid the advance loans worth 2887 and received the interest of 8519 in the year 2018. The company also acquired a dividend of 5714 in the same year along with investment disposal of 63180. The net cash flow derived from investment activities in the year 2018 was 22191 after adjusting all the investment related activities in the account (Robinson, 2020). In the year 2019, the worth of the plant has been extended and becomes 9616. While the worth of intangible assets is diminished to 86 in the year 2019. Additionally the exercises of property disposal and equity obtaining are considered in these investing activities and esteemed as 6074 and 3790 separately. The organization additionally paid the loans in advance worth 708 and got the interest of 4694 in the year 2019. The organization additionally obtained a profit of 9708 in the year 2019 alongside investment disposal of 10500. The net cash flow generated from the investment activities in the year 2019 was 18192 which is subsequently lower than the cash generated previous year.
The net cash flow determined from the company’s financing activities in the year 2018 was 31084 while in the year the cash flow increased and became 103335 in the year 2019. Therefore it can be said that in terms of financing the company has improved its performance in the year 2019. The value of cash along with the equivalent of cash is diminished as 51551 in the year 2018 and 57519 in the year 2019. While on January 1st in the year 2018 the cash has been valued as 215881 and on December 31 in the same year, the value has become 164330. However, in this area the cash value of Amey UK Plc has decreased as compared to the last year where the value on January 1 in the year 2019 valued as 164330 and on December 31 in the same year the value of it became 106811.
2.2 AS2
Income statement of Amey UK Plc
As per the income statement of Amey UK Plc, the value of total sales in the year 2018 for the company was 1883354 which increased to 2135116 in the year 2019. The cost of sales of Amey Plc was 1502749 and 1727178 in the year 2018 and 2019. The company’s profitability is not that strong and it experienced a loss of 42924 in the year 2018 which increased to 143169 in the year 2019. Also in the year 2018, the company has experienced an operating loss of 178242 because of too much operating expenditures the company has incurred in that year. However, Amey Plc managed to recover the loss in the year 2019 and generated an operating profit of 73241. The income generated from finance of 9457 is considered in the account of Amey plc in the year 2018 while a cost of finance valued as 19605 in the same year and considered by the company which recorded a net expenditure of finance of 10148 in the year 2018 (Abbasi et al. 2017). The income generated from finance of 5130 is considered in the account of Amey plc in the year 2019 while a cost of finance valued as 24855 in the same year and considered by the company which recorded a net expenditure of finance of 19725 in the year 2019. A total loss of 177262 has been experienced by Amey Plc in the year 2018 which determined that the company has paid huge taxes in the financial year. In the year 2019, no such losses have been formed by the company and a profit of 39003 has been made by it.
Balance sheet of Amey UK Plc
The balance sheet of Amey UK Plc has determined certain fluctuations of the resources in the year 2018 to 2019. The total value of assets of the company which are non current in nature in the year 2018 was valued as 793146. In the year 2019, Amey Plc has determined a drop on its value of non current assets which fluctuated to 493599. However the value of current assets of Amey Plc has been increased in the year 2019 where the value of it was 699184 in 2018 and in the next year it became 760298. Even after the slight increase of current assets of Amey in the year 2019, the total assets of the company has been calculated as 1492330 which is slightly lower in the year 2019 and is 1253897. As per the value of assets, the company has struggled due to lack of total assets in the year 2019 as compared to the previous year (Judge et al. 2019). Also the total liabilities of Amey Plc decreased in the year 2019 and became 1308943 where the value of it was 1525154 in the year 2018. The value of total equity of Amey Plc was 32824 in 2018 which increased to 55046 in the year 2019. Therefore it has been analysed that the financial performance of Amey Plc decreased in 2019 where the total equity of the company increased in the following year.
Reference list
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