Ratio Analysis

ASSIGNMENT GUIDELINES

With reference to your organization OR an organization of your choice, answer the following questions. Your answers must cover all the learning outcomes and assessment criteria.

1.1 Determining how to obtain financial data and assess its validity:-

Briefly introduce your organization (about 50 words).

Note: The organization should be introduced very briefly. You may describe briefly the nature of its business. A detailed introduction is not required.

Q.1.2 Explain how financial data can be obtained.

Note: Make a mention of sources of data. For example internal sources and external sources may be discussed.

Q.1.3 What recommendations you will make to assess its validity.

Note: The criteria for assessing the validity may be mentioned. The role of internal and external auditors and their limitations may be discussed.(Total words 400 including 50 for introduction)

LO 1.2. Applying different types of analytical tools and techniques to a range of financial documents and formulate conclusions about performance levels and needs of stakeholders.

Q.2.1 Describe what information is provided by Profitability Ratios, Liquidity Ratios, Efficiency Ratios & Investment ratios. (1000 words)

Note: Give formulae for the ratios and state from which part of the income statement or statement of financial position (balance sheet) these figures can be obtained. Also describe which aspect of the business is analysed by each of these ratios. It should also be mentioned if a higher value or a lower value of the ratio indicates a healthy sign.

Q.2.2 Obtain latest available financial statements of a public company of your choice. Analyze the financial data by calculating any 10 ratios, and comment on the financial health of the company. (600 words for comments)

Note: The annual reports of companies can be obtained from visiting following web page:

www.OrderAnnualReports.com/LSE

You can select any 10 ratios. Take the figures from the financial statements and place the figures in the formulae to calculate the ratios. Infer from the ratio what aspect of performance is indicated by each ratio. You should lay more emphasis on interpreting the ratios from stakeholders' point of view and make comments on the financial health of the selected company on the basis of the ratios. Please do not forget to attach the financial statements with the assignment. Failure to do so will make it impossible to check the calculations.

LO 1.3 Conducting comparative analysis of financial data:

Q.3.1 Compare the ratios of the current year and those of the previous year in respect of the company selected (see 1.2) and comment in what respects performance of the company has improved or deteriorated.

Note:The same ratios as calculated in 1.2 above should be calculated for the previous figures. Compare these ratios with the current years ratios and comment if the ratio indicates a positive or performance or otherwise.

LO1.4 Reviewing and questioning financial data:

Q.4.1 Briefly describe how internal and external auditors examine the data.