Analysing specific financial issues in a public limited company: Name of firm which is Cable & Wireless Communications plc.
Aim: To analyse and evaluate the following specific financial issues in an organisation.
Context: A friend has been to see you with the extracted financial statements of a public limited company and is asking questions about investing money into the firm:
1. Explain basically how the stock market works in specific in relation to public limited companies and also investors.
2. Explain the relationship between the firm’s financial performance and investor values. This must include Gross and Net Profit ratios; ROCE and Market Capital values.
3. Discuss the gearing level of the firm and the issues of debt funding for an investor. This must include the gearing ratio.
4. Summarised analysis of investing in the firm analysed and the limitation of financial information in making investment decisions.
This will all be supported by research including obtaining the appropriate financial information for an organisation, and the use of and creation and interpretation of specific relevant ratios in supporting answers to the above questions.
Guidance Notes:
The answer should be in essay format:
1. Include separate sections: Introduction; the stock market; financial performance and investor values; gearing impact on investment; and a final summary section
2. Include a table showing the ratios worked out (can be embedded in the essay) – supporting statements must be included to show how they were calculated.
3. The analysis should include information to allow an evaluation: over a number of years; against competitor firms; with industry standards and even against forecasts – if this information is available.
4. It is essential to choose a publicly limited company (plc) as the information should be readily be available.
5. The context is important in analysing the information – the industry, size, geographical locations, customer base.
6. Reference to texts and journals in terms of the academic views on particular corporate funding issues are important to include in supporting the evaluation.
7. The introduction should set out the main aims of the firm, a ‘brief’ overview of the firm; in the analysis section should provide an investment decision for your friend in the firm requested, and you also need to highlight the main issues and perhaps indicate some of the limitations with the analysis carried out.
You will have to go through the annual statement of the last 4 years of the company so from 2014 to 2010
Referencing Requirements:
Use books, journals, websites, company website, Cable & Wireless Communications plc annual statement.