Content
Pricing - Industry Accounting
This page is an extract from the full topic guidance on Pricing – Industry Accounting [46KB PDF]. It details any Constraints associated with Pricing – Industry Accounting, provides a summary of the Authoritative Guidance and lists any essential reading, further reading or associated documents.
If you have any queries on this topic, please contact the Sponsor by email: DGDC CS-2A-Asst-Hd.
Constraints
None.
Authoritative Guidance Summary
The Balance Sheet is a financial snapshot of a business
at the end of its annual accounting period. The balance sheet normally shows the
Opening and Closing values. The difference between the two is the activity
during the period - the Profit and Loss Account.
Cash Flow is important to any organisation, including
the Ministry of Defence. Limited liability companies are required to publish a consolidated cash
flow statement, which in summary shows the overall movement in cash.
The financial viability of a supplier is one of the
criteria to be considered as part of supplier selection to ensure the supplier
has adequate financial resources to fulfil the contract.
Ratio analysis is a technique for interpreting financial
accounts. It provides a simple 'top level' tool for comparing suppliers. The key
ratios including Return On Capital Employed (ROCE), Profit Margin, Liquidity
Ratios, Current Ratio, Acid Test Ratio and Gearing Ratio are described under
Authoritative Guidance.
All companies produce budgets for forthcoming financial
period. This facilitates the management of the business against a plan that is
invariably agreed with investors or their representatives (The Board).
Associated Docs
Annex A - Example Balance Sheet [41KB PDF]
Annex B - Example Profit and Loss Account [25KB PDF]
Further Reading
Company Legal Status topic
Company Financial Status topic
Supplier Selection topic
Office of Government Commerce (OGC) Website
