Financial statements and reporting
A Cadbury Schweppes case study

Page 1: Introduction

Limited companies (those owned by shareholders) are required by law to produce Financial Statements. These statements must be published and made available to shareholders as part of a company report. Cadbury Schweppes aims to produce clear financial statements that give a valuable insight into the company's strategy and performance. Cadbury Schweppes is a major international company that...
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Page 2: Establishing financial goals

Businesses need to have a clear direction to work towards, so that their employees know what they are seeking to achieve and what they need to do. The directors of a company (with the Finance Director or Chief Financial Officer playing a prominent role) establish financial goals which are used by investors, financial analysts and other external parties to monitor the performance of a...
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Page 3: Cadbury Schweppes┬┤ Profit and Loss Account

A Profit and Loss Account is a table compiled at the end of an accounting period, to show gross and net profit or loss. It is very useful for helping readers to understand the financial performance of a company.  A review of the Profit and Loss Account will help shareholders and other users to see how the company is performing. The table shows three key figures for 2004. A simplified...
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Page 4: The Balance Sheet

To understand the financial position of Cadbury Schweppes at a moment in time, it is necessary to 'freeze' the values of various financial components. These values, or balances, are used to set out the Balance Sheet. A Balance Sheet shows the relationship between the assets of the business (what the business owns or is owed), and the liabilities of the business (what the business owes). When...
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Page 5: Ratio anaylsis (Profitability analysis)

Financial statements can be analysed by shareholders, the financial press, and others to check how well a company is performing. Operating profit Ratios are determined from a company's financial information and used for comparison purposes, e.g. operating profit to sales. This can be set out in the form: Operating Profit : Revenue. Alternatively, it can be set out as a percentage. This is...
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Page 6: Conclusion

Cadbury Schweppes prepares financial statements because: As a listed company, it is legally required to do so. Cadbury Schweppes wants to communicate a true and fair picture of the financial state of the company to its shareowners and external analysts. The company values transparency and honesty and aims to reflect this is all its communications, both internally and externally. Cadbury...
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