Академический Документы
Профессиональный Документы
Культура Документы
Financial Analysis
Objective:
Overview:
Select a UK firm and its competitor listed elsewhere,
and create two portfolios.
Download financial statements (5 years) from Thomson
One Banker
http://banker.thomsonib.com/
Username: sbard@bangor.ac.uk Password: mawrbrawd
Reformulate financial statements
Income statements
Balance sheets (Statement of Financial Position)
Analyse Reformulated Financial Statements
Ratios based on reformulated financial statements
Analysis of profitability (Chapter 11
Common size and trend analysis (Chapter 9)
Interpret the results
Step 1
Select a listed firm domiciled in the UK and its competitor
that is listed elsewhere. For the purpose of this assignment,
exclude financial firms and global firms.
Example:
NEXT Plc (UK) and GAP Inc. (US)
Sector: Consumer Services
Industry Classification: Apparel Retailers
At this stage, in order to understand the nature of the
business, you should examine the firms, i.e., business
description, key financial data, price chart, analyst rating
available via Thomson, as well as going through their annual
reports
Step 2:
Reformulate Financial Statements, i.e., Balance Sheet
and Income Statement to distinguish between operating
and financing activities (refer to Penman Ch. 9)
For this assignment, the Reformulated Balance Sheet
and Reformulated Income Statement templates
available on Blackboard to facilitate your work.
Step 3:
Calculate ratios based on reformulated financial statements
Analysis of profitability (Chapter 11)
Inter-firm comparisons
Industry average comparisons
Common size and trend analysis (Chapter 9)
FLEV
Level 1
ROA OI/NOA
ROA
Level 2
PM = OI / Sales
Level 3
NFO
SE
Sales PM
NBC
NFE
NFO
Other Items PM
Expense Ratios
Other OI/Sales
Ratios
Borrowing Cost
Drivers
Ratios
Definition
RNOA
NBC
PM
01/31/04
01/31/03
01/31/02
01/31/01
59.32%
56.89%
53.30%
37.99%
6.98%
-11.54%
4.99%
4.24%
10.36%
9.45%
9.70%
9.69%
9.75%
9.56%
10.14%
10.03%
OLLEV
122.72%
127.72%
117.42%
87.72%
FLEV
129.36%
-0.71%
-29.74%
-21.30%
52.34%
68.43%
48.31%
33.75%
572.5%
601.9%
549.7%
392.1%
127.97%
57.12%
39.16%
30.96%
SPREAD
ATO
ROCE
ROE Drivers
ROE is decomposed into drivers over three levels of analysis:
1.
Effects of Leverage
1.
2.
Asset Utilization
3.
(FLEV
SPREAD)
ROCE
Check
2003
0.5932
(1.294
0.523)
127.04%
127.97%
2002
0.5689
(-0.007
0.684)
56.41%
57.12%
2001
0.533
(-0.297
0.483)
38.94%
39.16%
2000
0.3799
(-0.213
0.337)
30.80%
30.96%
ROCE
ROCE:
NEXT
vs.
GAP
RNOA
( FLEV
SPREAD)
ROE
ROCE:
NEXT
vs. UK
Firms
RNOA
(FLEV
SPREAD)
REQUIREMENTS:
Report Outline:
1. Background information on the firms and the sector
of operations
2. Analysis of Accounting Quality
3. Profitability Analysis
Financial Ratio Decomposition Approach
4. Results and Discussions
5. Conclusions