Patrick Financial Services, an accounting firm, specialises in providing accounting and taxation work for dentists and doctors. You have been provided with financial information relating to the firm in appendix 1. In appendix 2, you have been provided with non-financial information which is based on the balanced scorecard format. Appendix 1: Financial information Current year Previous year Turnover (£000) 945 900 Net profit (£000) 187 180 Average cash balances (£000) 21 20 Average trade receivables days (industry average 30 days) 18 days 22 days Inflation rate (%) 3 3 Appendix 2: Balanced Scorecard (extract) Internal business Processes Current year Previous year Error rates in jobs done 16 % 10% Average job completion time 7 weeks 10 weeks Current year Previous year Number of customers 1220 1500 Average fee levels (£) 775 600 Market share 14% 20% Learning and Growth Current year Previous year Percentage of revenue from non-core work 4% 5% Industry average of the proportion of revenue from non-core work in Accounting practices 30% 25% Employee retention rate 60% 80% Notes Using the information in appendix 1 only, comment on the financial performance of the business (briefly consider growth, profitability and credit management) II. Explain why non-financial information, such as the type shown in appendix 2, is likely to give a better indication of the likely future success of the business than the financial information given in appendix 1. III. Using the data given in appendix 2, comment on the performance of the business. Include comments on internal business processes, customer knowledge and learning/growth, and provide a concluding comment on the overall performance of the business.
Patrick Financial Services, an accounting firm, specialises in providing accounting and
for dentists and doctors. You have been provided with financial information relating to the firm in
appendix 1. In appendix 2, you have been provided with non-financial information which is based on
the balanced scorecard format.
Appendix 1: Financial information
Current year Previous year
Turnover (£000) 945 900
Net profit (£000) 187 180
Average cash balances (£000) 21 20
Average trade receivables days (industry average 30 days) 18 days 22 days
Inflation rate (%) 3 3
Appendix 2: Balanced Scorecard (extract)
Internal business Processes
Current year Previous year
Error rates in jobs done 16 % 10%
Average job completion time 7 weeks 10 weeks
Current year Previous year
Number of customers 1220 1500
Average fee levels (£) 775 600
Market share 14% 20%
Learning and Growth
Current year Previous year
Percentage of revenue from non-core work 4% 5%
Industry average of the proportion of revenue from non-core work in
Accounting practices 30% 25%
Employee retention rate 60% 80%
Notes
Using the information in appendix 1 only, comment on the financial performance of the
business (briefly consider growth, profitability and credit management)
II. Explain why non-financial information, such as the type shown in appendix 2, is likely
to give a better indication of the likely future success of the business than the financial
information given in appendix 1.
III. Using the data given in appendix 2, comment on the performance of the business.
Include comments on internal business processes, customer knowledge and
learning/growth, and provide a concluding comment on the overall performance of the
business.
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