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Young and Co and Fuller, Smith and Turner: Analysis of Performance and Financial Position

“Discovery consists of seeing what everybody has seen and thinking what nobody has thought”.

Albert von Szent. Nobel Prize Winner.

3,969 words, excluding Table of
Contents, References and Appendices.

Table of Contents

1. Introduction 3

2. A Comparison of Profitability from 2008 to 2010 3

2.1 Return on Capital Employed 4 2.2 Return on Shareholders’ Funds 6 2.3 Net Profit Percentage 6 2.4 Gross Profit Percentage 7

3. Liquidity Analysis 2009 to 2010 7

3.1 Current Ratio 7 3.2 Quick Ratio 8 3.3 Inventory Turnover 8 3.4 Debtors’ Analysis 8 3.5 Creditors’ Analysis 9

4. Capital Structures 9

4.1 Financing the Business: Young and Co. 9 4.2 Financing the Business: Fuller, Smith and Turner. 10 4.3 Financing Implications 11

5. Investment Analysis 11

5.1 Young and Co 11 5.2 Fuller, Smith and Turner 12 5.3 Implications of Investment Ratios 12

6. Issues with Published Financial Statements 13

References 15

Appendices 16

Appendix A: Reducing Beer Volumes 16 Appendix B: On and Off Trade Forecast 17 Appendix C: Public House Closures 18 Appendix D: Profitability Calculations 19 Appendix E: Liquidity Ratios 23 Appendix F: Efficiency Ratios 25 Appendix G: Financial Structure 27 Appendix H: Appraisal of Young and Co 2010 29 Appendix I: Appraisal of Fuller, Smith and Turner 2010 30 Appendix J: Financial Statements 31

1. Introduction

Young and Co and Fuller, Smith and Turner have similar business models, both owning public houses which are either managed or tenanted. Only Fuller’s brew beer, Young’s having sold their brewery in 2006. Both compete in a difficult environment, as the Beer market in Britain is enduring tough trading conditions. Over the period we will be