Sample Essay

P&L a/c is an important statement as it exposes the level of sales turnover and hence the gross profits. Additionally P&L a/c lists the various levels of operating expenses hence giving an investor the opportunity to compare the various levels of expenditures to make informed decisions about the profitability of Barclays and Vodafone. The P&L a/c of Vodafone and Barclays may be different since both exist in different industries.

To understand profitability, one needs to learn the source of value in a business. On the other hand, balance sheet is a statement that indicates the financial health of a firm. The statement outlines the financing structure of the business It lists the current assets and fixed assets against current liabilities and long term liabilities to expose the true financial health of a firm. Balance sheet indicates the financial health of a firm as of a particular date. It reflects the capacity of Barclays and Vodafone to raise further additional capital. This financial statement is necessary to indicate the leverage level and the liquidity of both Barclays and Vodafone. The statement indicate the financing structure and hence necessary for tax planning on Return on Equity. The two financial statements are important in assessing the financial performance of Barclays and Vodafone. Majority of criteria’s involve profitability, solvency and financial risk and turn over. It involves assessing the leverage, profitability, operational efficiency and the solvency of a business.

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