Assignment title:

Written Assignment

Word count:

1800 – evidenced based essay.

SECTION A

Analyze the performance of your chosen company using relevant financial and non-financial ratios (5 years). Your analysis should include profit ratios, efficiency, liquidity and other ratios that you consider relevant

Select a company form the list provided to you.

If you select a company outside of the list below, you will automatically fail this part of the assignment, unless you get a prior written approval from your tutor.

Give an introduction of the selected company (about the product or services, location, turnover, number of employees). Also comment little bit on the major competitor for your company (~ 200words)

Make a horizontal analysis and vertical analysis (of Profit and loss account and Balance sheet) for immediately preceding 3-5 years. Get a trend of the sales, profits, assets and liabilities. Comment on the trend (increase or decrease). Compare the trend to the industry (Sector) / GDP of UK (~ 100words)

Please refer to the slides that is published on Edmodo / for examples of horizontal analysis and vertical analysis (also attached in this sheet)

ALL RATIOS OF YOUR SELECTED COMPANY MUST BE COMPARED EITHER WITH INDUSTRY (SECTOR) AVERAGE OR WITH THE COMPETETOR.

Identify profits (~ 80 words)

Comment on the economic condition (ups and downs in the market of your selected company) – Example: If you have selected Singapore airlines, then comment on the airline industry.

For the preceding 5 years calculate the Financial ratios and comment on the ratios as shown below in sample analysis.

Use any of the below 4 ratios for commenting on profitability.

PROFITABILITY (Select any 4 from below) (COMPARE EITHER WITH INDUSTRY AVERAGE OR WITH THE COMPETETOR) (~ 180 words)

Gross profit ratio

Net profit ratio

Expense ratio

Return on assets

Return on Equity / Return on Investment

Return on ordinary shareholders’ funds

Operating ratio

Identify Dividends (~180 words)

For the preceding 5 years calculate the divided related ratios and comment on the ratios as shown below in sample analysis.

Use any of the below 4 ratios for commenting on dividends

DIVIDEND RATIOS (Select any 4 from below) (COMPARE EITHER WITH INDUSTRY AVERAGE OR WITH THE COMPETETOR)

Dividend Yield ratio

Dividend Payout ratio

Price earnings ratio

Earnings per share ratio

Dividend Cover ratio

Identify stability and Liquidity (~180 words)

Comment on company’s short term and long-term financial position.

For the preceding 5 years calculate the stability and liquidity ratios and comment on the ratios as shown below in sample analysis.

Use any of the below 4 ratios for commenting on stability and liquidity

Stability and Liquidity Ratios (Select any 4 from below) (COMPARE EITHER WITH INDUSTRY AVERAGE OR WITH THE COMPETETOR)

Debt to Equity ratio

Interest coverage ratio

Net cash transition period ratio

Gearing ratio

Debt to market capitalization proportion ratio

Current ratio or working capital ratio

Current ratio. The current ratio is the most basic liquidity test. It signifies a company’s ability to meet its short-term liabilities with its short-term assets. A current ratio greater than or equal to one indicates that current assets should be able to satisfy near-term obligations. A current ratio of less than one may mean the firm has liquidity issues.

Current Ratio = (Current Assets) / Current Liabilities

Quick ratio or acid test ratio

Quick Ratio. The quick ratio is a tougher test of liquidity than the current ratio. It eliminates certain current assets such as inventory and prepaid expenses that may be more difficult to convert to cash. Like the current ratio, having a quick ratio above one means a company should have little problem with liquidity. The higher the ratio, the more liquid it is, and the better able the company will be to ride out any downturn in its business.

Quick Ratio = (Cash + Accounts Receivable + Short-Term or Marketable Securities) / (Current Liabilities)

Absolute liquid ratio

Current cash debt coverage ratio

EFFICIENCY (Select any 4 from below) (COMPARE EITHER WITH INDUSTRY AVERAGE OR WITH THE COMPETETOR) (~180 words)

Asset Turnover ratio

Current Asset turnover ratio

Stock or inventory turnover ratio

Debtor’s turnover ratio

Cash Cycle

Creditor’s turnover ratio

Also identify and comment on the following (COMPARE EITHER WITH INDUSTRY AVERAGE OR WITH THE COMPETETOR) (~180 words)

Returns on Investment

Return on Assets

Return on Equity

Risk

Identify the asset value per share and the current market share price. (This will be available on the company website or google out. The annual report will have the yearend high and low values). Comment on the share prices of the company. Is it linear with the stock exchange indicator (STI – Strait times Index) (~180 words)

Consider non-financial (ratios) parameters like brand preference, customer retention and churn, customer experience, Innovation, customer service, KPI, SWOT, PESTLE, market share, customer loyalty, innovation, management capability, employee relations, quality and brand awareness and perceived value, CSR activities, sustainability activities, service quality, staff turnover, patents and trademarks, supply chain, R&D activities, etc….,

Make a comparative analysis, where-ever possible. (~ 250 words)

DON’T JUST LIST THE RATIOS. EXPLAIN/JUSTIFY THE TREND (REASONS FOR INCREASE / DECREASE)

Section B (~ around 400 words)

Critically evaluate the company’s corporate governance compliance and its impact on the brand and reputation as reported in the press (print, online and social media)

Discuss the proposed medium-term financial strategies for your selected company to become dominant in the industry / sector.

Refer the website of selected company or Google any information about the company performance or any news that has impact on the company financial performance (Example: If you have selected Singapore airlines, — It acquired Tiger and Scoot which have substantial impact on SIA financials. Comment on the motives of acquisition). You need to provide the source of information. (~ 90 words)

Any critics, its impact on the brand and reputation as reported in the press (print, online and social media). You need to provide the source of information. (~ 90 words)

Refer to the corporate governance report of the company (Refer to the annual report of the company to access to this report) (~ 90 words)

Identify the directors – write a bit on their role and their impact on the company

Identify the non-executive directors – write a bit on their role and their impact on the company. DONOT JUST LIST THE DIRECTORS.

Based on the analysis of financial and non-financial parameters set your vision and strategic financial goals for the company.

Conclusion:

Remember you need to make an impression on the board of directors for you to be considered for the critical post of Finance Director. The board of directors have asked you to write a report about your vision and strategic financial goals for the company in becoming a market leader in the sector in the future.

(~ 130 words)

NOTE

It is essential that all sources of information are correctly referenced using the Harvard system (see my attachments)