Accounting and Finance for Managers Report - William Hills plc

Added on -2020-07-22

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Accounting and Finance forManagers
EXECUTIVE SUMMARYManagement is able to take better decisions by assessing financial ratios. It provideseffective result to it whether revenue is generated by it or not. Moreover, investment techniquesalso guide managers to assess viability of the project in effectual manner.
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1QUESTION 1...................................................................................................................................1(A) Computation and justification of financial ratios and non-financial ratios to explain theperformance of the company..................................................................................................1(B) Analyse best performing company and evaluate reasons why this company would be apositive investment opportunity.............................................................................................8(C) Analyse poorly performing company and give recommendations to improve financialperformance............................................................................................................................9QUESTION 2.................................................................................................................................10(A) Discuss stages in the capital investment decision-making process and role of investmentappraisal process ..................................................................................................................10(B) Discuss main methods of investment appraisal with suitable numerical example........12CONCLUSION..............................................................................................................................13REFERENCES..............................................................................................................................15
INTRODUCTIONThe financial information is essential for the company as through this, financial positionmay be effectively stated whether firm is earning profit or not. The enclosed report deals withcomparison of three companies namely William Hills plc, Ladybrokes coral group plc and PaddyPower Betfair public limited plc. The financial ratios make clear that companies are effectivelygenerating revenue or not (Albelda, 2011). Moreover, investment appraisal techniques are alsouseful to assess whether project would be successful or not for the company. Management is ableto take better decisions by evaluating techniques of investment. QUESTION 1(A) Computation and justification of financial ratios and non-financial ratios to explain theperformance of the companyWILLIAM HILL PLCParticularsFormula201620152014Profitability ratioGross profit marginGross profit / netsales * 10081.74%85.27%88.57%Net profit marginNet profit / net sales* 10011.20%11.55%14.45%Operational ratioInterest coverage ratioEBIT / Interest Expense4.51%5.47%5.76%Net assets turnover ratioNet sales / Average total assets0.80%0.95%0.81%Structure ratiosCurrent ratioCurrent assets / Current liabilities0.710.520.76Liquidity ratioLiquid assets / Current liabilities0.710.520.76Gearing ratiosLong-term debt 7193707161
Shareholder’s equity 122612161160Debt to equity ratio .58:10.30:10.62:1Per employee ratiosProfit per employeeNet income/ number of employees111215Operating revenue peremployeeOperating income/ number of employees99102101LADBROKES CORAL GROUP PLCParticularsFormula201620152014Profitability ratioGross profit marginGross profit / netsales * 10085.40%0.00%0.00%Net profit marginNet profit / net sales* 100-14.15%-3.60%3.21%Operational ratioInterest coverage ratioEBIT / Interest Expense-0.19%-0.08%2.76%Net assets turnover ratioNet sales / Average total assets0.62%1.36%1.25%Structure ratiosCurrent ratioCurrent assets / Current liabilities0.330.650.59Liquidity ratioLiquid assets / Current liabilities0.330.650.59Gearing ratiosLong-term debt 750323439Shareholder’s equity 14354563922
Debt to equity ratio 0.52:10.71:11.11:1Per employee ratiosProfit per employeeNet income/ number of employees-8-33Operating revenue peremployeeOperating income/ number of employees588484PADDY POWER BETFAIR PUBLIC LIMITED COMPANY PLCParticularsFormula201620152014Profitability ratioGross profit marginGross profit / netsales * 10076.91%75.92%80.97%Net profit marginNet profit / net sales* 1000.79%15.67%18.89%Operational ratioInterest coverage ratioEBIT / Interest Expense2.64%61.70%978.34%Net assets turnover ratioNet sales / Average total assets0.33%3.94%2.22%Structure ratiosCurrent ratioCurrent assets / Current liabilities0.990.821.34Liquidity ratioLiquid assets / Current liabilities0.990.821.34Gearing ratiosLong-term debt 2141430Shareholder’s equity 431751302Debt to equity ratio 0.05:12.80:10.003

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