Financial Information for Decision Making Assessment: Company analysis report

Assessment overview

The purpose of this assessment task is for your team to apply your ratio analysis and financial analysis skills to a real company. You will work in teams of three or four to analyse the performance of GWA Group and advise on the near-term prospects of this company.

A report typically begins with a company description intended to assist investors to understand the business, its industry, its motivation and any advantages it has over its competitors. These factors are fundamental to determining whether a company would prove a profitable investment.

Assessment details

This assessment requires your team to analyse the financial information of GWA Group and evaluate the organisation's performance. Based on your analysis of relevant information relating to GWA Group, you are required to prepare a structured report (see recommended structure detailed below) commenting on the profitability, operating efficiency, liquidity and gearing of the company. The profitability and efficiency of the company should be analysed using the required ratios. Firms are accountable for generating profit with the assets employed. In addition, the firm must pay its debts as and when they fall due, therefore you are required to assess the liquidity and gearing of the business using the appropriate ratios'. Use the data from the financial statements in the annual report to calculate the ratios.

Your report should cover a 3-year period commencing 2012 and ending 2014, and should be sufficiently broad in scope to demonstrate your understanding of findings following the analysis. Use your analysis to draw a conclusion about the near-term prospects of this organisation.

Your report must cover the following:

Company and industry background

Briefly profile the company - history, financial highlights, other relevant company details, summary of the nature and current state of the industry in which it operates. This section of work will help contextualise the report in terms of key company information and the industry (and wider) environment in which the firm operates.

Analysis and interpretation of financial performance, position, and market standing

Based on the financial reports and other information, analysis that covers the past three financial years dealing with the following aspects and including consideration of segment information and position in relation to its industry:

• Profitability
• Efficiency
• Liquidity
• Gearing
• Cash flows

Include an assessment of other, typically non-financial, information relevant to the company's current state of financial affairs (for instance: global events, industry developments and issues, structural changes to the company such as changes in board composition, mergers or acquisitions, economic factors and any other relevant issues which may potentially impact on the operations of the company).

Manual calculation of specific ratios

The ratios to be manually calculated are: 

• return on shareholders' equity
• return on total assets
• net profit margin
• inventory turnover
• settlement period for debtors/accounts receivable
• settlement period for creditors/accounts payable
• asset turnover
• liquidity - current ratio
• financial gearing - gearing ratio

Please calculate additional ratios as you see fit to enhance and further explain your findings.

Summary and conclusion

Summarise GWA's current financial situation in terms of profitability and efficiency and the company's ability to pay its debt as and when it falls due. Provide recommendations for GWA to improve performance.

Presentation

Marks are allocated for report format and structure, flow, spelling, grammar, punctuation and referencing. Any material used from other sources (particularly reports from banks, investment analysts/brokers etc.) must be acknowledged and correctly referenced.

Suggested report structure

• Title page
• Executive summary
• Introduction and purpose of analysis
• Company and industry background
• Company
• Industry
• Analysis of financial report data
• Profitability
• Efficiency of operations
• Liquidity - short-term
• Gearing
• Assessment of other, relevant information
• Summary and conclusion
• Appendices
• Reference list.

This task is assessing your ability to demonstrate that you meet the critera for the following learning outcomes:

2. Apply accounting tools to prepare financial reports for both external and internal business use.

3. Research and interpret financial information in order to analyse problems and to aid business decision making.

4. Organise and communicate financial information, supported by well-reasoned arguments as appropriate.

5. Work both independently and as a member of a diverse team.

Assessment criteria

1. Presentation including format, layout, grammar, spelling and referencing.

2. Company and industry background that contextualises the report.

3. Analysis and interpretation of financial performance, position, and market standing.

4. Calculation of required ratios.

5. Clear and concise summary and conclusion.

Attachment:- Assignment.rar