Accounting and Finance

Assignment - Case study

Learning outcome 1: Demonstrate the following knowledge and understanding:
Demonstrate a deep and systematic understanding and broad knowledge of financial statements and the concepts of corporate finance and investment appraisal in order to evaluate management decisions against strategic corporate objectives.

Learning outcome 2: Demonstrate the following skills and abilities:
Analyze financial statements and evaluate management decisions through the application of relevant financial tools and techniques to assess their validity in achieving strategic corporate objectives.

You are required to write a 2,500-word report on the financial position and performance of FirstGroup plc over the last three years based on theannual reports of the company.

Your individual report should cover the following:
(i) Introduction
You should provide a short introduction to the company (its key features), and its current financial position (key metrics). Then identify the key resources of the company;before providing a brief comment on the challenges it faces in meeting its objectives in its markets.

(ii) Evaluate the financial statements and other financial information relating to FirstGroup plcto assess how the company has performed over the past three years taking into account any problems or opportunities identified in (i). This should be an interpretation of the ratios NOT the calculation of the ratios.

(iii) Discuss how the performance of FirstGroup plcover the past three years compares with one of its key competitors. Your answer should include some discussion as to whether the competitor identified faced the same opportunities and problems that FirstGroup plc faced; and how these werereflected in the competitor's financial statements.

(iv) Discuss-in your opinion- whether or not the Board of Directors of FirstGroup plc should support a new joint venture with a listed company; supporting your arguments based on the analysis in the previous three sections.

Analyze financial data and other relevant information of an organization and refer to relevant literature to form a judgment on the relative performance and the effectiveness of management in meeting the strategic corporate objectives in a given scenario.

Your work should show a critical insightful evaluation of corporate objectives, key opportunities and problems and how they have changed over the three years. There should be high level of creativity, and independent thought.

Extensive evidence of advanced applications and/or empirical results, where applicable, informed extensively by current research and practice in the area

Your work should show very high level of competence in analysing and interpreting the financial performance of the listed company and its main competitors and in communicating the outcome

The conclusions should be outstanding, logical and consistent with the corporate objectives, key opportunities and problems and financial performance and the performance of main competitors

Overall, the work should be Outstanding, well-directed presentation, logically and coherently structured, using correct grammar, spelling and accurate referencing and presentation.
Guidelines: Section (i) (20 marks)

500 words [450-550 words]

Your given company to analyze is FirstGroup Plc whose shares are traded on the London Stock Exchange (LSE).

You should first familiarize yourselves with the major characteristics of the company. Probably the best way of doing this is to visit the company website and download key documents such as financial statements, annual reports, audit reports, corporate governance reports, corporate social responsibility reports, and investor relationships materials.

Keep in mind that you need data, and market and non-market information for the last three years.

You are required to compare (and contrast) FirstGroup Plc with one of its key competitors in Section (iii), which carries a significant weight of 30%. Therefore, you need to and should determine a key competitor to collect similar data and information at the very beginning; and most recommendably as the first thing.

You should cleverly choose preferably a stock-market listed company (and preferably from the LSE), for which you can easily find detailed and reliable data, information and analysis from publicly available reliable sources in addition to company websites.

You can and should read Company Analysis Reports prepared by prestigious investment banks and their research departments to understand how investment analysts formulate their approach in financial analysis and investment recommendations.

You may and should refer to your chosen company's industry specifics and name a few additional major competitors in its sector.
Opportunities and challenges encountered by the industry and companies may and should refer to the impact of the recent global COVID-19 pandemic.

Section (ii) (35 marks)

875 words [790-960 words]

Evaluate the financial statements and other relevant market information relating to the given company to assess how the company has performed over the past three years taking into account any problems or opportunities identified in Section (i). This should be an interpretation of the financial ratios but NOT the calculation of these ratios.
You should clearly cite your references from where you gather the associated financial ratios. More importantly, you should be able explain why you consider to analyze and interpret specific financial ratios in your case.
Normally, financial ratios should be compared through time and across peer group of companies, or industry-wide.

Section (iii) (30 marks)

750 words [675-825 words]

This section basically requires a comparative analysis using combined data and outcome in Sections (i) and (ii). You may prefer to refer to the industry specific issues as well.

Section (iv) (15 marks)

375 words [335-415 words]

This section should conclude based on the analysis in the previous sections that whether the Board of Directors should support a new joint venture to be undertaken by FirstGroup Plc. Normally, joint ventures are a significant type of corporate restructuring in terms of both organizational and financial restructuring. Under normal circumstances, joint ventures require corporate strategic decision-making and are subject to the approval by the company shareholders. Therefore, it is reasonably expected that the Board of Directors would bring their proposal before the shareholders.

Give their strategic characteristics; joint ventures have significant impact on a wide and diverse group of companies' stakeholders.
Identify major stakeholders in a stock-market listed company in terms of

• Internal stakeholders (Board of Directors, Executives, Managers and Employees)
• External stakeholders (Existing and Potential Shareholders, Customers, Regulators and Public Authorities, and general Society)

Note that some stakeholders can be both internal and external; such as Executives can be Shareholders at the same time.

Your perspective should focus on Shareholders as joint ventures may relate to wide- spectrum corporate restructuring, and require internal and/or external financing. As such, there should be some consideration of enterprise wide risk management.

Under normal circumstances, there is no single, correct or wrong answer in this section. You should be able to support your arguments based on the quantitative and qualitative analysis undertaken in the previous three sections.