Ker Vs Carillion Case

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KIER v CARILLION EXERCISE
BFM234: ACCOUNTING FOR NON-FINANCIAL MANAGERS
Group 77

Table of Contents
Introduction ..................................................................................................
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Whilst Kier’s year end is 30 June 2013, Carillion’s year end is 31 December 2012. Therefore the companies cannot be directly compared in identical market conditions. Economic conditions and seasonal business patterns influence how much revenue is generated at different points in the year. Kier, in its narrative report which accompanies the financial statements, specifically cites bad weather in 2013 as a reason for its reduced revenue (Kier, 2013, p.35). Whereas Carillion’s performance during this bad weather is not accounted for in its financial statements as its year end is December 2012. Thus its revenues do not reflect the same period of time as Kier’s revenue and a distorted picture has been created when comparing ratios of Kier and Carillion. The true performance of Kier compared to Carillion is therefore difficult to ascertain with different year …show more content…
Similarly for Carillion, the operating profit used is before intangible amortisation and non-recurring operating items. These figures have been used to improve the comparability of ratios for Kier and Carillion. As the annual reports are created by the companies themselves, it is possible for the accountants to manipulate the financial statements to represent what the directors of the company want to show (Muhammed, 2013). Furthermore what Kier includes as ‘exceptional items and amortisation’ may differ to what defines ‘intangible amortisation and non recurring operating items’. Therefore by using these figures the scope for manipulation by each company has been eliminated and there a better reflection of the company’s ability to generate money and cash flow. Thus comparing the ratios of Kier and Carillion is more

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