Finance for Managers

The word count is 1,200 words with a 10% margin.

You must compute the ratios yourself rather use than the ones provided and they MUST be calculated as shown in the file below . You must include the workings.

The ratios you need to calculate are included below. It is these you must calculate. You will not gain any marks for other ratios and will lose marks if you do not calculate these.

		Amadeus
Gross profit margin
Gross profit turnover	x 100	Gross profit Operating revenue (Turnover)	x 100
Operating profit margin
Profit Before Interest and tax Turnover	x 100	Operating P/L [=EBIT] Operating revenue (Turnover)	x 100
Operating Expenses margin
Operating expenses Turnover	x 100	Other operating expenses Operating revenue (Turnover)	x 100
Sales growth rate
Turnover_{latest year}– Turnover_{previous year} Turnover_{previous year}	x 100	Use, for the calculation Operating revenue (Turnover)	x 100
Return on shareholders’ investment
net income Capital and reserves	x 100	P/L for period [=Net income] Shareholders funds	x 100
Return on capital employed
Profit Before Interest and tax Capital and reserves + debt	x 100	Operating P/L [=EBIT] (Shareholders funds + Long term debt)	x 100
Current Ratio
current assets:current liabilities	?:1	current assets: current liabilities	?:1
Acid test (quick) ratio
(current assets :current liabilities less inventory	?:1	current assets: current less Stock liabilities	?:1
Gearing ratio
debt Capital and reserves + debt	x 100	Long term debt) Shareholders funds + Long term debt	x 100
Interest cover
Profit Before Interest and tax Interest paid	times	Operating P/L [=EBIT] Financial expenses	times
Asset turnover
Turnover Total assets	times	Operating revenue (Turnover) TOTAL ASSETS	times
Receivables days
accounts receivables Operating revenue (Turnover)	x 365 days	Debtors Operating revenue (Turnover)	x 365 days
Inventory days
Inventory Cost of goods sold	x 365 days	Stock Costs of goods sold	x 365 days
Payables days
Accounts payable Cost of goods sold	x 365 days	Creditors Costs of goods sold	x 365 days
Cash Operating Cycle
Receivables days + Inventory days – Payables days	days	Receivables days + Inventory days – Payables days	days

Most of the data you will need will be provided in the income statement and statement of financial position in the accounts you have retrieved. You also need end of year market price and number of shares outstanding and these can be accessed by clicking on stock data and then Annual stock data (see below). You need this data to compute the following ratios:

Earnings per share
net income Number of shares		P/L for period [=Net income] Shares outstanding (th) Note the (th) means you need to multiply the figure by 1,000 to get the number of shares
Price Earnings ratio
End of year share price Earnings per share		Market price – year end Earnings per share

Calculating appropriate accounting ratios prepare a report analysing the performance of and comparing the performance of the company over the last 2 years under the following headings :

Profitability,
Liquidity,
Working capital management,
Solvency & risk,
Shareholder return,
Overall financial performance.

Prepare a report analysing the performance of and comparing the performance of the company over the last 2 years under the following headings :

Finance for Managers

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