Accounting and Finance for Decision Making

Assessment Task - Written report that critically analyses the financial position and performance of a chosen company and competitor for a potential equity investor.

Learning Outcome 1: Understand the fundamental concepts underlying financial accounting statements.

Assignment Description

Task: Analysis of financial accounting statements

You should choose a UK-based listed company from the list the list of seventeen shown separately on Moodle. You should also find a suitable competitor company to enable valid comparisons of performance to be made.

You will need access, via their website (or corporate website), to their most recent annual report and financial statements (accounts) as a minimum to your research.

Required:

Prepare a business report for a potential equity investor, including:

A brief introduction to the company, the nature of its business and its current business model.

A comparison of the financial position and performance of your company and a suitable competitor using ratios over the two most recent financial years. Your analysis should cover profitability, liquidity, efficiency and capital structure ratios. Review and adjust your ratios in the light of any changes in accounting policies or any unusual transactions or events that might have occurred and discuss the ratios fully.

Your opinion on whether the company would be a good investment in terms of a small holding of ordinary shares? Justify your answer.

Consideration of the limitations of your analysis and any reservations that you may have about the analysis that you have provided.

You are advised to keep abreast of business news about your company to explain any impact on capital and financial markets and perceived performance of your company.

You should make use of tables and graphs to present complex information and ensure that your report is written in a professional way. Remember that your report needs to critically address the issue of whether the business is a worthwhile investment rather than simply describing the ratios and financial data.

Any calculation of ratios or supplementary data can be included in an appendix to your work. Work in any appendices will not count towards the word count limit.

To achieve a good mark in this assignment you will need to address the following points:

Ensure your work is professionally presented and adequately referenced.
Provide a clear potential-investor focussed analysis (where explanations of causes and developments are more important than numbers) .
The report should follow the normal structure of a business report. An Executive Summary is not required.
Use: A4 pages; Arial font, size 12; 1.5 line spacing.