Business Report based on Ratio Analysis (1,750 words)
Background:
You have recently joined a successful financial advisory firm as a financial analyst. The
financial advisory firm offers a range of services to its clients, including research and
recommendation to private and institutional investors and lenders on the investment and credit
potential of large UK listed firms.
Requirement:
You have been approached by your manager who oversees research on a number of firms,
including your allocated case study company. They would like you to prepare a report on the
investment potential of the firm. You are required to conduct an in-depth analysis of the
company’s financial performance and position, using information from their annual report and
other relevant sources of information. This analysis should conclude with a recommendation on
should an equity investor purchase the company’s shares.
Required: You should calculate the Profitability, Liquidity, Efficiency, Solvency, and Investment
ratios of your allocated company based upon the financial statements for the financial years
ended 2022 and 2021 and provide commentary on the key trends and issues arising indicated
by your calculations.
Resources: You should use the Annual Report of your allocated company for the year 2022, avoid
using Annual Reports for other years. You can also use commentaries related to your allocated
company (Financial Times, Bloomberg, etc) and also the company’s official website.
Additional Information
YSJU_London_Campus_MBA_Programme_Accounting_and_Finance_for_Decision_Making_MBB7008M_2023-24
Suggested Structure (and word count per section):
As you are preparing a business report you are expected to use suitable business
language and format. Our recommendation is that your report takes the following
format:
Executive Summary: This should provide a succinct summary of the report by
identifying its purpose, the tools of analysis and key findings and recommendation.
Table of Contents
- Introduction (300 words): This should provide an introduction to the report by presenting
a brief insight into the company e.g., its sector, key competitors, main business activities
and products, relevant recent financial news, recent share price performance and any other
background information deemed useful to provide a context for your subsequent analysis.
The introduction should also provide insight into how the company will be analysed and a
clear signposting to the content of the report. - Financial Analysis (1,150 words): This represents the main body of the report and should
include detailed financial analysis for recent two years. The financial analysis should
include:
- Four Profitability Ratios (Two Margin Ratios and Two Return Ratios) (Income
Statement and Statement of Financial Position) - Two Liquidity Ratios (Statement of Financial Position)
- Two Efficiency Ratios (Statement of Financial Position)
- Two Solvency Ratios (Income Statement and Statement of Financial Position)
- Two investment Ratios (Income Statement and Statement of Financial Position)
Thereafter, these ratios need to be interpreted using the Income Statement, Statement of
Financial Position, Cash Flow Statement, and Non-Financial Information.
- Conclusion and Recommendation (300 words): This section should conclude and
provide a clear recommendation of investment in the company by its potential equity
YSJU_London_Campus_MBA_Programme_Accounting_and_Finance_for_Decision_Making_MBB7008M_2023-24
investors with supporting justification, based on earlier analysis. Should highlight the
positive aspects of performance as well as any perceived risks. - References: List alphabetically using Harvard style
- Appendices: You may include relevant supporting information, e.g. list of ratios, extract
from annual report or other relevant document to support information in the main report etc.
Note: The items underlined form part of the word count
You are more than welcome to use whatever tools you have at your disposal to answer the
questions, however, keep in mind that you need to show your work to demonstrate how you arrive
at the answers.
Please do not handwrite and scan your answers as they need to be typed using Word processing!
This is to ensure that your answers are legibly, and the marker(s) will be able to clearly read and
understand what you are saying.