...Chapter 1 Introduction 1.0 Introduction Financial analysis and performance evaluation of a company are vital facts for any company in today’s world. It includes different aspects of the company. This analysis assesses the viability, stability and profitability of the company. At some level every business decision involves financial analysis and valuation. Outside the firm, security analysts conduct financial analysis and valuation to support their buy/sell decision. This is necessary to price an initial public offering and to inform parties to sale, estate settlements, and divisions of property involving ongoing business concerns. Even credit analysts, who typically do not explicitly estimate firm value, must at least implicitly consider the value of the firm’s equity “cushion” if they are to maintain a complete view of the risk associated with lending activity. One of the aims of this study involves the use of analysis and valuation in order to know about the company’s current financial situation. Another aim of this report is to point out whether the share price of the company is overpriced/underpriced/accurately priced. ACI Limited was established as the subsidiary of Imperial Chemical Industries (ICI) in the then East Pakistan in 1968. After independence, the company was incorporated in Bangladesh in 1973 as ICI Bangladesh Manufacturers limited as a Public Limited Company. In 1992, the company was divested to local management and the name of the company changed to Advanced...
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...Financial Performance Analysis of MAS | | 2008 | 2007 | 2006 | 2005 | 2004 | 2003 | Asset management | Receivables turnover | 7.44 times | 8.12 times | 7.12 times | 4.84 times | 5.16 times | 4.41 times | Days sales in receivables | 49 days | 45 days | 51 days | 75 days | 71 days | 83 days | Proftability ratio | Profit margin | 1.63% | 0.58% | -1.03% | -14.25% | 5.39% | 3.88% | Return on assets | 2.44% | 8.48% | -1.90% | -19.98% | 6.97% | 5.89% | Liquidity ratio | Current ratio | 1.38 | 1.42 | 0.74 | 0.81 | 1.18 | 1.04 | Asset management – Receivables turnover ratio measures how efficiently a firm uses its assets.it can be noted that this ratio has increased significantly from year 2003 to 2008 by 69%. This significant increase implies that the company’s collection of its outstanding credit account is getting more efficient. It can also be proven from the days of collection itself which has reduced from 83 days to 49 days. Proftability ratio - Profit margin. It can be noticed that in 2005, it has the lowest ratio of as compared to other years amounting to -14.25% followed by -1.03% in 2006. The reason of this negative value for these two consecutive years were due to the inability to control its fuel bills and its operation requirement. However, the company managed to improve its losses by 2008 as its profit margin was enhanced to 1.63%. Next is Return on assets. In the case of MAS’s ROA indicates that there is inefficient use of company's assets because...
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...CORPORATE FINANCIAL REPORTING PROJECT CEAT * Name of the Company: Cavi Elettrici e Affini Torino (CEAT) Limited * Name of the Chairman: R P Goenka * Name of the MD: P K Chowdhary * Listed in: Bombay Stock Exchange (500878) National Stock Exchange (CEATLTD) CEAT Limited is a tyre manufacturing company based in Mumbai & producing over 10 million tyres a year. Founded in Italy as CEAT Tyres by Virginio Bruni Tedeschi, the company established its manufacturing in India in 1958 and was sold to Pirelli by Virginio's heir Alberto Tedeschi in the 1970s. The company's Indian division was then taken over by RPG Enterprises in the year 1982 which also got the rights to the CEAT brand and renamed the company as CEAT Limited. CEAT owns two tyre manufacturing facilities in Maharashtra (Bhandup and Nasik) and has also set up a greenfield radial tyre manufacturing facility at Gujarat (Halol). It has three manufacturing plants in Sri Lanka in Joint Venture and it also outsources certain amount of automotive tubes, tyres and flaps. It also markets tubes and flaps which are outsourced from its partners. CEAT offers a range of tyres to all user segments and manufactures tyres for all vehicles consists of heavy-duty trucks and buses, light commercial vehicles (LCV), earthmovers, forklifts, tractors, trailers, cars and jeeps, motorcycles and scooters and auto-rickshaws. CEAT exports to over 110 countries across the world. CEAT is the only...
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...BMW AG; Financial Performance Analysis This paper is prepared by: Asif Ahmed BBA 13th Batch Department of Accounting & Information Systems Faculty of Business Studies University of Dhaka, Bangladesh E-mail; asif.ahmed0001@yahoo.com Cell Phone; +8801922939126 BMW AG; Financial Performance Analysis (Asif Ahmed) 1 of 24 Executive Summary: The world is just recovering from a big recessio n. Various big corporations became bankrupt because of this. Many of the automaker giant posted loss during the last 2 or three years, like – Toyota and the biggest corporation of the world General Electric (GE) became bankrupt. More or less all the big corporations are affected by it. BMW, one of the automaker giant, could retain its’ profitability over last three years when the global recession take place. It also affected by the recession but cannot lose the profitability. This interesting thing inspires me to conduct research on the financial performance of BMW AG. In the beginning of my paper I give an overview on the BMW. Later I analyze the net profit, sales revenue, costs and assets base of the corporation for the last 10 years. Then I go for ratio analysis to judge the financial health of the organization. In ratio analysis I use Return of Assets (ROA), Return on Equity (ROE), Basic Earning Power (BEP), Liquidity ratio, Profitability Ratio, Divided Payout (DP) Ratio and Du Pont Chart to conduct my analysis. The findings on the analysis are discussed along...
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...lesson from its past, and from over all analysis of financial and business aspects its look like company have progress well over the last years, and looking solid in fixing its fundamental parts of its operations placing business on a strong position to accelerate. Its heavy spending and media war, campaigns and advertisement have enabled the company to boost is sales by 4.5% excluding fuel. Its universal customers appeal and continued investment in price & quality have proved key to its progress, and offers to buy deals at best price. Its variety of product range, offering flexibility to choose from, have enabled growth in customers to 18m a week helping till accelerate fast. Price perception have improved with great products and fair price on shelves and continuous investment in price, promotion and marketing activities. Investing in five core areas, (corporate objectives) have set a vision for the company, helping growth and provide great opportunities to progress in the future. It is concentrating its online business leg to help to generate more revenue, which has increased in growth by 25% , which could increase it market share overall and create new competitors to expand its growth. Its growth plans involve heavy investment, which could prove risky in such a unstable economic conditions and turmoil for the sector and industry, where other competitors are focusing on their existing operations. Sainsbury’s performance has rung the bells on market leader Tesco...
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...Financial Analysis Tools Nicola Maclin American Military University Managers should have the ability to assess performance of decisions they have made or intend to make, through structured and robust financial analysis. Managers need tools to forecast or predict as they struggle to make decisions on a daily basis to execute business strategy for the company. Financial analysis tools can drive projections and predictions in many areas of the business, from planning for production and distribution to decisions on a product or service. Managers can use these tools to both assess and improve business performance. Performance evaluation is an important component of managing a business. Managers need feedback to evaluate how well they have accomplished business strategy and managed key business process. Managers need to be able to link strategy with profitability. Financial analysis tools can help provide that much needed feedback. Financial data can be used to compute ratios analysis. These financial ratios gives managers the first look at the company’s vital signs and is used to assess a complete financial health and identify operational problems. Ratio analysis allows management to quickly and efficiently address concerns like: return on capital investment and the company’s profit margin. Ratio analysis can be an effective and useful management tool if ratios are calculated on items that are meaningful and where practical steps can be taken to make improvements in...
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...What is financial accounting? Financial accounting is regarded as a professional in modern society. Most of the firms, especially the large ones, need it and have a particular department or team called accounting. In universities, financial accounting becomes a compulsory subject which BBA students must study. It is so well known that almost all people have heard of it. What actually is financial accounting? More specifically, what the main objectives or roles financial accounting has so that firms need it at a critical manner? Generally speaking, the purpose of accounting is to give relevant data or information that is necessary to make sound decision for the firms. And the main objective of financial accounting is to prepare financial statements such as statement of financial position, income statement, statement of owner’s equity and statement of cash flow. The preparation must be guided by generally accepted accounting principles, “GAAP” in short, of the physical location. The statements are then used to tell the external users the performance of the firm (Eisen, 2003). And the primary need for financial accounting, or sometimes called financial accountancy, is to minimize the principal-agent problems in organizations. This is to be done by evaluating and monitoring agents’ (manager) production and presenting the performance to people who interest in. In addition, financial accounting serves a lot of important objectives. It aims to understand the operation of the business...
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...An Internship Report On “Financial Performance Analysis of Uttara Bank Limited” (Maijdee Court Branch, Noakhali) A study based on Uttara Bank Limited "Nourished by the age old heritage of Bengal” [pic] Comilla University An Internship Report On “Financial Performance Analysis of Uttara Bank Limited” An Internship Report submitted in partial fulfilment of the requirements for the degree of Bachelor of Business Administration (BBA) Supervised By Shamem Ara Mili Assistant Professor Department of Accounting & Information Systems Faculty of Business Administration & Management Studies Comilla University . Submitted By Trina Saha Class Roll: 03; Exam Roll: 0806003 Batch: BBA (3rd Batch); Session: 2008-2009 Department of Accounting & Information Systems Comilla University Date of Submission: 10.08.2014 Dedication Letter of Transmittal August 10, 2014 Shamem Ara Mili Assistant Professor, Department of Accounting & Information Systems Comilla University, Comilla. Subject: Submission of the Internship Report. Dear Madam, With due respect, I would like to inform you that, I am Trina Saha bearing student ID: 0806003, a student of Department of Accounting & Information Systems have completed my 3 (Three) month internship at the Uttara Bank Ltd, Maijdee Court Branch under your supervision. It is my great pleasure to inform you that I have the opportunity to submit an internship...
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...Business Analysis and Valuation Report Prepared By: Version # Updated on ------------------------------------------------- Acknowledgments ------------------------------------------------- If applicable, include acknowledgement to contributing individuals: ------------------------------------------------- ------------------------------------------------- Analyst’s Name | Number | E-Mail Address | | | | Document Name | | Date Created | | Milestone 1 date submitted | | Milestone 2 date submitted | | Milestone 3 date submitted | | Finalization date | | | | | | | | REPORT VERSION RECORD The Business Analysis and Valuation Report is a managed document with tracking of versions, changes, and release dates for each of the three milestones. Version Name | Version Number | Date | Author(s) Name(s) | Change Description | | | | | Document created | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Milestone versions of the report are issued including the complete document with the sections completed to date to reflect the work to date by the analyst team. The milestone versions of the document are authorized for release only after the analyst’s signature has been obtained. Milestone 1 PREPARED: DATE:___/___/___ (for acceptance) (, signature) POSITION: ___ Milestone 2 PREPARED: DATE:___/___/___ ...
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...What types of financial ratios are used to analyze financial performance? Financial ratios are categorized corresponding to the data they provide. The following terms are types of ratios used: 1. Liquidity ratios 2. Asset turnover ratios 3. Financial leverage ratios 4. Profitability ratios 5. Dividend policy ratios Are some more important than others? Why? Financial ratios give insight into an organization’s way of management and its financial state. Most ratios defined above can be evaluated from data made available by compiled financial statements. Which ratios are important to creditors, investors, and managers? Why? The importance of these rations allows a firm to analyze the market place and to measure the firm's financial data against those of other companies to steer away from unwanted financial problems- shutting down of operations. What is the purpose of financial statement analysis? According to (Robinson, Henry and Pirie, 2012), the purpose of a financial statement analysis is comprised of: • Evaluation of equity/debt investment/credit rating • Transfer of information • To use an analysis to develop a given financial statement inquiry. Robinson, T. A., Henry, E., & Pirie, W. L. (2012). International Financial Statement Analysis (2nd ed.). Hoboken, NJ: John Wiley and Sons, Inc.. What are some tools we might use to analyze financial performance? Readyratios.com (2014) informs that analysis of financial performance can be: • SWOT (strength...
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...Week 1 Financial reporting and its analysis has an important role in the information intermediaries (auditors, press, financial analysts) and financial intermediaries (banks, insurance companies, mutual funds) functioning. Information intermediaries and financial intermediaries use the information from the financial reports to investigate the investment opportunities and find the “good” ones (Palepu, Healy & Peek, 2013). The “lemons” problem explains the problem in identifying the “good” and “bad” ideas being offered in the market (Holod & Peek, n.d.). The “bad” ideas are valued by investors at an average level, as they know that in the market there are both types of ideas. This approach, unfortunately, leads to less attractive conditions of financing to the owners of “good” ideas; the proportion of “bad” ideas increases. The identification of “good” investments can be performed by following the four steps (Palepu, Healy & Peek, 2013): * Business strategy analysis * Accounting analysis * Financial analysis * Prospective analysis All the above analysis get the information from the financial statements, publically data available, from business application context that consists of credit analysis, debt analysis, general business analysis and other details on corporate business (Palepu, Healy & Peek, 2013). The business strategy analysis is a tool to form the performance expectations using industry data and competitive strategy data. Accounting analysis assess...
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...9-193-029 REV: SEPTEMBER 13, 2004 WILLIAM BRUNS Introduction to Financial Ratios and Financial Statement Analysis There is almost always a reason why someone picks up an organization’s financial statements and begins to analyze them. Lenders or creditors may be interested in determining whether they will be repaid money they have lent or may lend to the organization. Investors may be interested in comparing a potential investment in one organization with that of another. Employees may want to compare the current performance or financial status of their employer with earlier periods. Regulatory agencies often need to assess organizational or industry financial health and performance. Financial analysis is always based on a set of questions, and the specific questions requiring answers depend on who the financial statement user is and the reasons for his or her analysis. Financial analyses based on accounting information consistently involve comparisons. Amounts or ratios may be compared with industry norms, the same measurement in a prior period, the same measurement in a competitor’s organization, or with planned and budgeted amounts previously established. Figuring out which comparisons will best answer the questions motivating the analysis is one of the necessary steps in making the best use of accounting information. Financial ratios can help describe the financial condition of an organization, the efficiency of its activities, its comparable profitability...
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... : Monday 2:30 pm to 6:30 pm Role and Purpose This subject aims to introduce an analytical framework for carrying out business analysis and valuation by using financial statements for valuing different kind of businesses. It contributes to the achievement of the BBA Programme Outcomes by enabling students to identify and resolve ethical issues contained in the financial statements (Outcome 4), apply basic accounting and financial theories to analyze financial reports and to identify potential problems and risks (Outcome 7). By the end of this subject, students will become a professional user of financial statements to advance further into the field of business valuation as investment analysis. It requires students to present and communicate effectively in English for general business communication (Outcome 1). Learning Outcomes Upon completion of the subject, students will be able to: a. Develop the ability to critically assess a firm’s financial condition through analyzing financial statements; b. Apply analytical tools to make forecasts and value firms and projects using different valuation techniques; in certain business context such as credit analysis and equity valuation. c. Evaluate and compare corporate valuation decision in specific contexts such as securities analysis, credit assessment...
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...Airways Ltd: A case study for Financial Statement Analysis Peter Wells* and Anna Wright. 12 February 2004 Not to be used or cited without the permission of the authors * Corresponding author: School of Accounting, University of Technology, Sydney, Broadway NSW 2007 Australia Tel: 61-2-9514 5295 Fax: 61-2-9514 5515 Email: peter.wells@uts.edu.au 6. Financial Analysis The aim of financial analysis is to present and summarise information contained in the financial statements in a manner that facilitates an understanding of the activities of the firm, and ultimately, forecasting future period financial statements. 6.1 Reformatting of financial statements A major problem with general purpose financial reports is the intertwining of the operating (and investing) and financing activities of the firm. Furthermore in the accounting analysis previously undertaken (section 5) accounting practices will be identified that are considered inappropriate or that obscure actual firm performance. These issues can be addressed through the reformatting or recasting of the financial statements of the firm. A consequence of the intertwining of the operating and financial activities of the firm is that summary measures of firm performance will reflect both operating and financial activities and management decisions, with this making interpretation of such measures problematic. Accordingly, a necessary first stage of financial analysis is the separation of operating...
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...Financial analysis Accountancy Financial analysis (also referred to as financial statement analysis or accounting analysis) refers to an assessment of the viability, stability and profitability of a business, sub-business or project. It is performed by professionals who prepare reports using ratios that make use of information taken from financial statements and other reports. These reports are usually presented to top management as one of their bases in making business decisions. Continue or discontinue its main operation or part of its business; Make or purchase certain materials in the manufacture of its product; Acquire or rent/lease certain machineries and equipment in the production of its goods; Issue stocks or negotiate for a bank loan to increase its working capital; Make decisions regarding investing or lending capital; Other decisions that allow management to make an informed selection on various alternatives in the conduct of its business. Financial analysts often assess the firm's: 1. Profitability -its ability to earn income and sustain growth in both short-term and long-term. A company's degree of profitability is usually based on the income statement, which reports on the company's results of operations; 2. Solvency - its ability to pay its obligation to creditors and other third parties in the long-term; 3. Liquidity - its ability to maintain positive cash flow, while satisfying immediate obligations; Both 2 and 3 are based on the company's...
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