Accounting & Finance for Managers (textbook is accounting and finance for non specialists by Atrill and McLancey, 9th Edition)
Assessed Assignment
Corporate Financial Analysis
The assignment will be to undertake an analysis of a company of your choice, from published information. (The company is Qatar airways)
- Background to the industry
- Background to the company
- Critical Success Factors for this type of company
- Trend & ratio analysis of the business with consequent commentary on performance
- Comparison with another similar business in the same sector (British airways)
- Sensitivity analysis
Use Directors’ commentaries, Notes to the accounts and info from the web may be used as well. Reference any material used.
Support with ratios, cash flow analysis and reference to the Notes to the Accounts.
Also, support it with graphs, tables and any other visual material where appropriate.
Guideline length for your analytic report is a maximum of 2, 500 words. However, because a lot of the material is numeric or may be graphical, a good report (which is well supported with such material) may succeed in being shorter.
The assignment is: to undertake an analysis of a large corporate business from published information
- Description of the business and its operating segments
- Description of the state of the industry
- Ratio analysis of the business with consequent commentary on performance
- Comparison with other similar businesses in the same sector
- Sensitivity & Risk analysis
- Assessment of evident strategy and prospects
Pick a Company
- Any Country, English Information, Currency rate / sterling, Conventional Financial Statements, Large, Competitor Analysis, Compare Key Measures, Compare other significant items, Read executives’ commentaries & Notes, Any other web commentaries.
Pick a Company : Tips
- Careful with Groups / Multi Division Companies
- Careful with companies operating in different countries
- Accessible and comparable competitors
- Pick a subject you know about or can intuitively understand
- Pick something you’re interested in
- Pick something on which there is good information
The Analytic Report
Title Page (Subject and Your Name)
Executive Summary
Contents
- Introduction
- Background to the Industry
- Background to the Company
3.1 Background
3.2 Critical Success Factors
- The Financial Statements
4.1 Overview
4.2 Revenue and Profitability
4.3 Returns to Investment
4.4 Asset Management
4.5 Liquidity
4.6 Solvency
4.7 Cash Flow
- Discussion
- Conclusion
Bibliography
Appendices
Scheme for Company Analysis
Executive Summary
- Short : third to half a page
- Subject of Report
- Summary of Main Conclusions
Contents Page
- Sections
- Sub Sections
- Appendices
- Introduction
- Purpose of the report
- Overview of subject
- Comments on Methodology
- Main Sources of Information
- Any Limitations
- Background to the Industry
Can refer to Porter’s Five Forces:
- Competition in the Industry
- Potential of New Entrants
- Power of Suppliers
- Power of Customers
Threat of Substitute Products.
- Background to the Company
3,1 Background
- History
- Key Facts
- Ownership
- Group Structure
- Main Product Groups
- Geographic Spread
- Significant Events
3.2 Critical Success Factors
- Attracting Customers
- Building the Brand
- Encouraging Customer Returns
- Achieving Optimum Price Per Seat
- Achieving Premium Routes and Good Coverage
- Managing the Fleet
- High Quality Aircraft
- High Aircraft Utilisation
- Managing Capacity and Pricing
- Achieving High Revenue per Seat
- Managing Finances
- Managing Costs
- Maintaining Solvency
- Funding for Growth
- Financial Statements
4.1 Overview
- Consolidated?
- Year End Date?
- Inclusions?
4.2. Revenue and Profitability
- How total revenue and profitability has changed over the last few years?
- Check whether there are any underlying reasons such as acquisition or sale of subsidiary businesses or divisions,
- Check for varied sales performance by different operating divisions.
- Identify an appropriate comparator
- Net and Gross profit margins and EBITDA margin if your comparison company(s) is based in a different country.
4.3. Returns to Investment
- Earnings per Share?
- What has the company’s dividend policy been?
- How does the company perform in terms of key ratios such as ROCE and ROE? Competitor?
- Any share buy backs or issues?
4.4. Asset Management
- Non Current Assets PPE vs Intangibles. What are they?
- Other Non-Current Investments?
- What are the cash flows that relate to non-current assets? Trend?
- How efficiently are Non Current Assets Managed? Competitor?
- How well is working capital being managed? Competitor?
- What is the trend in working capital?
4.5. Liquidity
- How does the current ratio look?
- Acid test?
- Month’s cover?
- Comparisons with competitors?
4.6. Debt & Solvency
- Have there been movements in levels of debt in the examined year and in recent years?
- What is debt leverage? Competitor?
- Is interest cover sufficient?
- Does the company face a big cash outflow in a future year?
- Does it have the capacity to take on more debt?
- Are there other Long Term Liabilities?
- Overall, is the business underfunded?
4.7. Cash Flow
- Net Cash Flow from Operations?
- Net Cash Flow for the year?
- Free Cash Flow to Equity (FCFE)?
- Any Equity Funding Flows?
- Anything notable?
- Discussion
How do you interpret the company, it’s performance and likely futures on the basis of your analysis?
- How the company is performing overall,
- what it’s core strategies seem to be,
- how it is performing in comparison with it’s competitors,
- any key issues which should keep it’s directors ‘awake at night’,
- What are the key strengths and ‘core competences’ of the company?
- What are its areas of potential weakness or risks that could impact on its capacity to grow in the future?
- Conclusion
- Your final summary and conclusion
- Not Overlong
- Future Prospects
- Comparisons with competitor?
