You have recently joined a successful financial advisory firm as a financial analyst. The financial advisory firm offers a range of services to its clients, including research and recommendation to private and institutional investors

Business Report based on Ratio Analysis (1,750 words)

Background:

You have recently joined a successful financial advisory firm as a financial analyst. The financial advisory firm offers a range of services to its clients,
including research and recommendation to private and institutional investors and lenders on the investment and credit potential of large UK listed firms.

Requirement:

You have been approached by your manager, who oversees research on a number of firms, including your allocated case study company. They would like you to prepare a report on the investment potential of the firm. You are required to conduct an in-depth analysis of the company’s financial performance and position, using information from their annual report and other relevant sources of information. This analysis should conclude with a recommendation on whether an equity investor should purchase the company’s shares.

Required: You should calculate the Profitability, Liquidity, Efficiency, Solvency, and Investment ratios of your allocated company based upon the financial
statements for the financial years ended 2023 and 2022 and provide commentary on the key trends and issues arising as indicated by your calculations.

Resources: You should use the Annual Report of your allocated company for the year 2023, avoid using Annual Reports for other years. You can also use
commentaries related to your allocated company (Financial Times, Bloomberg, etc) and the company’s official website.

Suggested Structure (and word count per section):

As you are preparing a business report, you are expected to use suitable business language and format. Our recommendation is that your report takes the following format:

Executive Summary: This should provide a succinct summary of the report by identifying its purpose, the tools of analysis and key findings and recommendations.

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Table of Contents

1. Introduction (300 words): This should provide an introduction to the report by presenting a brief insight into the company e.g., its sector, key competitors, main business activities and products, relevant recent financial news, recent share price performance and any other background information deemed useful to provide a context for your subsequent analysis. The introduction should also provide insight into how the company will be analysed and a clear signposting to the content of the report.

2. Financial Analysis (1,150 words): This represents the main body of the report and should include a detailed financial analysis for the recent two years. The financial analysis should include: 

• Four Profitability Ratios (Two Margin Ratios and Two Return Ratios) (Income
• Statement and Statement of Financial Position)
• Two Liquidity Ratios (Statement of Financial Position)
• Two Efficiency Ratios (Statement of Financial Position)
• Two Solvency Ratios (Income Statement and Statement of Financial Position)
• Two investment Ratios (Income Statement and Statement of Financial Position)

Thereafter, these ratios need to be interpreted using the Income Statement, Statement of Financial Position, Cash Flow Statement, and Non-Financial Information.

3. Conclusion and Recommendation (300 words): This section should conclude and provide a clear recommendation of investment in the company by its potential equity investors with supporting justification based on earlier analysis. Should highlight the positive aspects of performance as well as any perceived risks.

4. References: List alphabetically using Harvard style

5. Appendices: You may include relevant supporting information, e.g., a list of ratios, an extract from an annual report or other relevant document to support information in the main report, etc.

Note: The items underlined form part of the word count

You are more than welcome to use whatever tools you have at your disposal to answer the questions, however, keep in mind that you need to show your work to demonstrate how you arrive at the answers.
Please do not handwrite and scan your answers as they need to be typed using Word processing!
This is to ensure that your answers are legible and that the marker(s) can clearly read and understand what you are saying.

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Learning Outcomes of MBB7008M 

You must successfully achieve the following programme Learning Outcomes to pass this assessment:

7.1 Demonstrate in-depth, specialist knowledge and mastery of techniques relevant to the study of opportunities and challenges of business and management

7.2 Demonstrate an advanced and critical understanding of concepts, information and techniques informed by knowledge at the forefront of the study of contemporary business issues within the context of society

7.5 Formulate a critical awareness of current issues in business management informed by contemporary research and practice

7.7 Extrapolate information critically and creatively utilising appropriate decision making techniques in order to extract meaning and understanding, solve problems, and identify and evaluate options in a world of uncertainty and imperfect information