Financial Statement Analysis Assignment

EC7095 – FINANCIAL STATEMENTS ANALYSIS

Table of content

I.            Introduction

II.          Financial Statement Analysis

1.  Analyzing profitability

2.  Analyzing liquidity

3.  Analyzing financial gearing and predicting corporate failure

4.  Analyzing shareholder interests

III.        Conclusion

1.  Limitations

2.  Recommendation

 “The objective of financial statements is to provide information about the financial position, performance and changes in financial position of an entity that is useful to a wide range of users in making economic decisions”

                                                                                                (IASB Framework)

Do current published financial statements achieve this objective?

The analysis should be well explained and cover:

1.      Profitability

2.      Liquidity

3.      Gearing

4.      Shareholder Interests

2 chosen FTSE companies:

·         Tate & Lyle Plc.

·         Dairy Crest Plc.

Further Information:

You are required to present well-structured answers in the form of a report to a potential new investor who is looking to invest in one of the companies that you have analysed. The report should use approximately 3500 words (excluding calculations) and should make appropriate and justified conclusions that include an answer to the question above.

Learning outcomes assessed:

·         Understand the functioning of the financial reporting system

·         Understand the components of financial statements and the relationships between them

·         Evaluate the relevance of the information contained in a firm’s financial statements

·         Use financial ratios to evaluate a company’s performance

Assignments will be graded according to the following criteria:

·         Evidence of critical judgement in selecting, ordering and analysing content in order to present a sound argument

·         The demonstration and understanding of relevant concepts and models

·         The demonstration of insight and originality in responding to the assignment

·         The extent and level of research undertaken and the degree to which this research is appropriately referenced

Some useful websites:

·         http://www.londonstockexchange.com/home/homepage.htm

http://www.ft.com/home/uk