|ES979: Financial Analysis & Control Systems|
Critically appraise the costing system, budgeting system, or project appraisal system which is currently used by your organization. This could be at the strategic level, business unit, or operating area as appropriate.
You are required to:
- Analyze the chosen system
- Consider how it could be improved by adopting another methodology that you have covered in this module. You are required to justify your chosen alternative method
You are required to examine in detail the latest available annual financial statements of a chosen company / Group of Companies to provide an in-depth analysis of its financial performance. This will be a company quoted on the Singapore, or UK stock exchanges (where accounts are available in English).
If you are in any doubt as to the validity of your chosen company please consult with the module tutor, preferably before the end of the taught phase of the study block.
Your analysis should be in four parts
B.1. Briefly introduce the company and identify one major competitor
B.2. Calculate the 10 most relevant ratios for the two years reported in the latest annual financial statements that you believe will enable you to understand the company’s operational and financial performance. You should justify each ratio chosen. The ratios should cover the areas of profitability, efficiency, and liquidity, and should reflect the performance of the company and the industry that it is in
B.3. Using only the ratios in part two, critically appraise the company’s performance in relation to the major competitor identified in part 1. You may use similar ratios calculated for the competitor.
B.4. Based on all your analysis, make a series of no more than five key practical recommendations to the board as to how the company might improve its financial performance.
You may not choose one of the companies covered in the In-module presentations.
Learning outcomes assessed in this assessment are:
- Interpret the basic business accounting statements
- Differentiate between the different methods of measuring financial performance within a business
- Critically analyze financial data to generate further information
- Provide a critical interpretation of the relationship between the operational performance of a business and the financial measures of the business
Question A or B
Question A is designed for students in employment who are able to get access to data internally. If you are answering this question, please anonymize the company and make sure that you answer both parts of the question. In answering A.2, you will need to do some research into the application of the techniques covered to ensure to make sure that they are relevant to your own particular company.
Question B is more general and thus suitable for any student to answer.
Question B Choice of company
You should choose a company that you know something about and understand the way that it operates. The choice is limited to companies quoted on the Thai (where the accounts are available in English) or UK stock markets (e.g. FTSE350). I suggest that you do not choose financial services companies unless you work in that sector. You cannot choose companies that were used in the In-module assessment.
Make sure you can find the latest annual financial statements before selecting the company. The easiest way to find these is to do an internet search of the company name with the expression ‘Investor relations’ added. This gets you to the part of the company’s website that deals with giving information to investors, and you will find the financial statements there.
There is no need to put the financial statements in the PMA, but they should be referenced.
Question B.2 Choice of ratios
The ratios that you select should reflect the company’s performance and the industry that is in, as well as other factors you consider relevant. For instance, do not use a gearing ratio, if the company has no borrowing. Some industries focus on specific ratios as being important.
Your main source of ratios should be those contained in the list in the manual, although, if you wish you can use others, but they would have to be fully justified and referenced to a valid academic source (not Investopedia, Wikipedia, or similar)
Question B.3 Critical analysis
You should here be comparing and critically analyzing the performance against its competitor. Your analysis can only use ratios calculated in question B.2 and comparative ratios for the competitor.
Question B.4 Recommendations
Your recommendations must flow from your analysis and be both practical and justified, and show how the recommendation will improve the overall financial performance.