Assignment Task (Assignment Number: UA525)

Section A: Assignment title, important dates and weighting

Assignment title:

CW3 – In Depth Analysis of a Company’s Performance Using Financial Ratio Analysis

Group or individual:

Individual Assignment

Module title:

Financial Control

Module code:

7 ENT 1065

Module leader:

Moderator’s initials:

TB

Submission deadline:

Week 21 – 19 Dec 21 – 23:59 UK time

Target date for return of marked assignment:

4 weeks max

You are expected to spend about

20

hours to complete this assignment to a satisfactory standard.

This assignment is worth

28%

of the overall assessment for this module.

Section B: Student(s) to complete

Student ID number	Year Code

Notes for students

• For undergraduate modules, a score above 40% represent a pass performance at honours level.
• For postgraduate modules, a score of 50% or above represents a pass mark.
• Late submission of any item of coursework for each day or part thereof (or for hard copy submission only, working day or part thereof) for up to five days after the published deadline, coursework relating to modules at Levels 0, 4, 5, 6 submitted late (including deferred coursework, but with the exception of referred coursework), will have the numeric grade reduced by 10 grade points until or unless the numeric grade reaches or is 40. Where the numeric grade awarded for the assessment is less than 40, no lateness penalty will be applied.
• Late submission of referred coursework will automatically be awarded a grade of zero (0).
• Coursework (including deferred coursework) submitted later than five days (five working days in the case of hard copy submission) after the published deadline will be awarded a grade of zero (0).
• Regulations governing assessment offences including Plagiarism and Collusion are available from https://www.herts.ac.uk/about-us/governance/university-policies-and-regulations-uprs/uprs (please refer to UPR AS14)
• Guidance on avoiding plagiarism can be found here:https://herts.instructure.com/courses/61421/pages/referencing-avoiding- plagiarism?module_item_id=779436
• Modules may have several components of assessment and may require a pass in all elements. For further details, please consult the relevant Module Handbook (available on Studynet/Canvas, under Module Information) or ask the Module Leader.

Assignment Briefing Sheet (2021/22 Academic Year)

This Assignment assesses the following module Learning Outcomes (from Definitive Module Document): LO1 – explore the need for financial planning and measurement to justify survival, growth, profitability, and social objectives; LO2 – examine the costs incurred in a business organisation, driven by manufacturing systems. LO3 – assess the different types of costing systems available, and the suitability of each in differing situations; LO4 – apply relevant measures for financial controls and planning in the context of a manufacturing business;

Assignment Brief Prepare a Report for Senior Management on the Financial Performance and Health of a Company of your Choice from the given list of companies. Please see pages 3 & 4 of this document for further details.

Submission Requirements: 1. Submit your work as a Word Document in (.pdf) format

Marks awarded for: Please see page 3 of this document for full details on marking criteria.

Type of Feedback to be given for this assignment: General feedback & issue of marks. A more complete and detailed feedback is available upon request (online 1:1 session).

Assignment Brief

This assignment is to be based around the analysis of a company’s performance using Financial Statements and the ratios that we have covered in our lectures, tutorials and readings and any other performance indicators that you want to research.

Imagine that you are the Chief Financial Officer (top finance person in company) for a company and that company leadership has asked you to do an analysis of all the financial performance indicators of the company and to share that with the Board of Directors.

With this in mind choose ONEcompany of your choice from the List of Ten Provided Below on Page 4 and to look at that company’s financial statements online (preferably using data from 3 recent years).

Analyse the company’s data and review the data to give a view as to how the company is performing and what it needs to focus on in the next year or two to improve its financial position.

Present this in a concise report that you would take the Board of Directors through with your observations and ideas clearly laid out.

For this assignment you are to:

Prepare a short report (800 words maximum +- 10 %)

Report should be structuredasfollows: (allocated marks)

1. Introduction short description of your Chosen Company and what is being covered in Report. (10%)
2. Analysis of Companies Current Position using Financial Statements and looking at Profitability, liquidity, leverage and efficiency ratios (30%)
3. Describe and highlight any issues that are revealed by this Financial analysis (10%)
4. Articulate what the company needs to focus on to improve its Financial position (10%)

5. Summarise the Report (10%)
6. Finish with list of sources used in your research (Financial Statements used, example books, journal papers online sources etc) (10%)

A further 20% will be awarded for the overall coherence of your presentation, taking into account the validity and logic of your argument, the professionalism of your presentation

and the extent to which you used your case study to illustrate and apply your argument. (20%)

Notes:

1. This is NOTa narrated presentation, or a video recording it is simply a written report.
2. You have access to many sources on this subject: please use what you need.
3. Please do not just copy the Lecture or Tutorial material for this, it will receive zero marks – research and do your own effort.
4. Follow the guidelines laid out here closely and use your initiative and imagination to make it a professional report.
5. Feel free to use tables, graphs and illustrations to make your report clear (tables, graphs and illustrations are not included in word count, nor are the lists of resources (item 6 above) or Financial Statements).
6. There is a 800-word maximum +- 10 %. Any subject matter past that point will not receive any marks.
7. Should you have any further questions on this assignment they are to be asked at the tutorials and drop ins.

Annual Reports for Ten Well Known Companies

You need to pick JUST ONE Company for your Report

1. TATA (India)

19 to 20 & 20 to 21 https://www.tatamotors.com/investors/annual-reports/

17 to 18 & 18 to 19 https://www.tatamotors.com/wp-content/uploads/2019/07/05155543/TML-IR-AR- 2018-19.pdf

2. Ford Motor Company(USA)

2019 https://www.annualreports.com/HostedData/AnnualReportArchive/f/NYSE_F_2019.pdf

2018 https://www.annualreports.com/HostedData/AnnualReportArchive/f/NYSE_F_2018.pdf

2017 https://www.annualreports.com/HostedData/AnnualReportArchive/f/NYSE_F_2017.pdf

3. Proctor & Gamble(USA)

All https://www.pginvestor.com/financial-reporting/annual-reports/

4. Toyota(Japan)

All https://www.toyota-industries.com/investors/library/reports/

5. Dangote Cement (Nigeria)

19 & 20 https://dangotecement.com/wp-content/uploads/2021/05/Dangote-Cement-Plc-Annual- Report-20201.pdf

18. & 19 https://dangotecement.com/wp- content/uploads/2021/04/DangoteCementPlc_2019_AnnualReport-2.pdf
19. Rolls Royce (UK)
20. & 20 https://www.rolls-royce.com/~/media/Files/R/Rolls-Royce/documents/annual- report/2020/2020-full-annual-report.pdf
21. & 19 https://www.rolls-royce.com/~/media/Files/R/Rolls-Royce/documents/annual- report/2019/2019-full-annual-report.pdf
22. Domino’s Pizza (USA)
23. & 20 https://www.annualreports.com/HostedData/AnnualReports/PDF/NYSE_DPZ_2020.pdf

18 & 19

https://www.annualreports.com/HostedData/AnnualReportArchive/d/NYSE_DPZ_2019.pdf

8. Geely Automotive(China)

All http://geelyauto.com.hk/en/financial_statements.html

9. Dassault Aviation (France)

All https://www.dassault-aviation.com/en/group/finance/annual-report-archives/

10. Boeing Aviation(USA)

All https://www.boeing.com/search/results.html?q=financial+statements

You may also use other data available from other sources on the same company you pick from this list –

Good Luck .

Assignment Solution/Sample Answer

DOminos financial health

Report file

[Date]

[Company name]

[Company address]

Introduction: The report entails a financial study of a firm listed on the S&P/ASX 200 index. In my example, I’ll conduct the research on Domino’s Pizza Enterprises. The Domino’s Pizza Financial Statement will be generated using horizontal analysis over a two-year period. Horizontal analysis is “where data from two or more eras are compared side by side” (Ang, 2019). Horizontal analysis is a method for displaying and evaluating trends. Horizontal analysis takes the oldest period as the base period and compares it to succeeding eras using its statement. The income statement and balance sheet of Domino’s Pizza will be subjected to a horizontal analysis. Every business will experience good and negative trends. Negative trends will be turned into positive trends by organisations that effectively monitor their financial records. Domino’s Pizza has a strong upward tendency, with revenue increasing year after year. Domino’s Pizza has a strong upward tendency, with revenue and assets increasing year after year. Year after year, the company’s sales and gross profit continue to rise. Due to the company’s development of its delivery service, delivery costs skyrocketed, propelling them to the top of the globe in terms of providing the greatest pizza in a timely way.

Analysis of Companies Current Position using Financial Statements and looking at Profitability, liquidity, leverage and efficiency ratios:

The approach for lowering expenditures is included in this cycle, with the final objective of increasing revenue. The approach is divided into two main components. The principal method entails boosting earnings by lowering expenditures and selling the things at market value. It should be noted that the expense in this number refers to the cost of the organization’s payments and purchases, not the cost of the clients. The company shall make every reasonable effort to keep the costs of acquisitions made during the fiscal year to a minimum. This should be achievable if the number of supplies purchased is reduced. The company might also try to locate a less priced supplier. Different assets might also be purchased in the near term to enable the company to save money in the long run. For example, if a delivery van is needed, the organisation might purchase one.

Profitability Ratio:

1. EBITD Margin

For Year 2020: = 17.3928

For Year 2019: = 16.6534

2. EBITDA Margin

For Year 2020: = 19.1801

For Year 2019: = 18.4507

Domino’s Pizza Enterprises has high liquidity ratios (> 1) which means it can easily convert its assets to cash. It also boasts a great Asset Turnover Ratio and can therefore turnover its assets in case they incur debt. The profitability ratios also show a wonderful EBITDA which shows the organization’s profits are increasing significantly.

Liquidity:

1. Current Ratio

= Current assets / Current Liabilities For Year 2020: = $0.96B / $0.49B =1.96

For Year 2019: = $0.61B / $0.42B =1.44

2. Quick Ratio

= (Current Assets – Inventory – Prepaid expenses) / Current Liabilities For Year 2020: = ($0.89B) / $0.49B = 1.82

For Year 2019: = ($0.55B) / $0.42B = 1.32

Leverage:

The use of borrowed money (debt) to fund the acquisition of assets with the hope that the new asset’s income or capital gain would surpass the cost of borrowing is known as financial leverage. In most circumstances, the debt provider will set a limit on the amount of risk it is willing to assume and the amount of leverage it will allow. Asset-backed lending involves the financial provider using the borrower’s assets as security until the loan is repaid. In the event of a cash flow loan, the company’s overall creditworthiness is utilised to secure the loan. In the corporate sector, the idea of leverage is well-known. It is mostly used to raise a firm’s returns on equity capital, particularly when the company is unable to improve its operational efficiency or returns on total investment. Because the interest earned on borrowed money is larger than the interest earned on savings.

Describe and highlight any issues that are revealed by this Financial analysis:

Domino’s Pizza is a global firm with a revenue of $1.802 billion USD, but throughput is slow when compared to corporate expenditures. If employees are proficient in doing their responsibilities, employee satisfaction will rise, and the business would prosper. Domino’s Pizza will reduce costs by using efficient procedures. The fundamental difficulty with Domino’s Pizza is that they have extra workers in all areas, such as production, sales, and cleaning, as needed, but management does not know how to minimise the number of people that are now working.

Articulate what the company needs to focus on to improve its financial position:

When a firm seeks to keep clients by force, creating a wonderful experience for the customers might come at a cost. When a customer wishes to update his order after placing it, the representative will usually respond that the order has already been prepared and cannot be modified or that it has been dispatched to the address. This can be inconvenient for customers because they must wait for the initial order to be closed and delivered before ordering a new pizza because the previous one was not modified. Another example is when the pizza is not properly wrapped and the contents become untidy as a result of a stick on the delivery box. When the pizza comes, the toppings have ruined, and the goal has been accomplished.

Summary of the Project:

Condensed financial statements combine the income statement, balance sheet, and cash flow statement of a corporation into a single document. These condensed financial statements are designed to give a fast snapshot of a company’s financial situation with minimum information, and are often only used internally. The two most popular methods of summarising are to emphasise the financial data in the financial statements and to describe some significant information in the financial statement notes. However, be aware that most summaries emphasise the positive news while ignoring the unpleasant.

References:

Barber, Phillip. “Bull in the China Market: The Gap between Investor Expectations and Auditor Liability for Chinese Financial Statement Frauds.” Duke J. Comp. & Int’l L. 24 (2013): 349.

Barber, P. (2013). Bull in the China Market: The Gap between Investor Expectations and Auditor Liability for Chinese Financial Statement Frauds. Duke J. Comp. & Int’l L., 24, 349.

Barber, Phillip. “Bull in the China Market: The Gap between Investor Expectations and Auditor Liability for Chinese Financial Statement Frauds.” Duke J. Comp. & Int’l L. 24 (2013): 349.

Teoh, Wenji. “The Market Risk on Domino’s Pizza Incorporation’s Peformance.” (2019).

Teoh W. The Market Risk on Domino’s Pizza Incorporation’s Peformance.

Southam, Colette, Paul W. Beamish, and Matthew Winkler. “Domino’s Pizza Enterprises: Weighted Average Cost of Capital.” (2021).

Southam, C., Beamish, P. W., & Winkler, M. (2021). Domino’s Pizza Enterprises: Weighted Average Cost of Capital.