Accounting Assignment: Financial Analysis Report

Running Head: Accounting financial analysis report
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Project Report: Accounting financial analysis report

Accounting financial analysis report 2
Introduction.....................................................................................................................3
Case overview............................................................................................................3
Industrial engineering sector....................................................................................4
Company overview....................................................................................................5
Competitors’ overview...............................................................................................5
Literature review.............................................................................................................6
Application of theory......................................................................................................9
Interpretation, conclusion and recommendation.....................................................13
Interpretation.............................................................................................................14
Recommendation and conclusion.........................................................................14
References....................................................................................................................16
Appendix........................................................................................................................20

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Introduction:
Financial analysis is a procedure to examine the financial information of an
organization to reach over a conclusion. This financial analysis mainly offers an
outcome through reallocating the resources to the internal process and the
operations of the company. Financial analysis is usually done by the organization
and the management of the business to evaluate the financial performance of the
business so that the alternations could be done in the strategies and the policies of
the company (Zabarankin, Pavlikov and Uryasev, 2014). Further, financial analyst
does the financial analysis to estimate the financial position and financial
performance of the business so that they could make the conclusion about the
investment and divestment from the company. Moreover, investors do the financial
analysis to evaluate the financial position and performance of the business so that
they could make the decision about the investment and divestment from the
company.
Thus, financial analysis is done by the stakeholders of the business to make
various conclusions according to their nature. This process assists them to make
better decisions about the company’s performance. Financial analysis could be done
through various bases. Ratio analysis, vertical analysis, horizontal analysis etc are
the most common way to analyze the performance of the company through
evaluating the financial statements of the business. In this description, ratio analysis
has been done to evaluate the position of the Spirax- SARCO Engineering plc and
the engineering sector of United Kingdom.
Case overview:
This report has been presented to the stakeholders of the Spirax- SARCO
Engineering plc and the engineering sector or the stakeholders of the industrial
engineering sector of the United Kingdom. For evaluating the performance and the
position of the industrial engineering sector and the Spirax- SARCO Engineering plc,
financial reports of the company has been analyzed and a study of ratio analysis has
been performed over the company to reach over a conclusion.
For this report, industrial engineering sector has been taken into the concern
and the financial performance of the industry has been analyzed. Basically, in the

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context of this assessment, three well-known, and London Stock Exchange listed
public companies from the United Kingdom who are strong competitors have been
identified for comparing and assessing their financial performance. These companies
are winnowed based on their share prices and market capitalization:
A. Spirax - Sarco Engineering Plc - £4,129.28 listed on 03 June 2013
B. Hills & Smith Holdings Plc - £1,041.79 Market Capitalization listed on 26
March 1969
C. IMI Plc - £3,598.24 Market Capitalization listed on 09 March 1966
Further, the financial performance of Spirax- SARCO Engineering plc has
been analyzed in context with the financial performance and position of Hills and
Smith and IMI PLC. Further, for analyzing the performance and the position of the
company, ratio analysis study has been done. This report briefs about the various
position of the company and the industry such as liquidity, efficiency, solvency,
capital structure and profitability position.
Industrial engineering sector:
The Industrial Engineering Sector, also known as the manufacturing industry
of the United Kingdom, has a long standing history from the late eighteenth century.
During the early years of its establishment, the Industrial Engineering sector was
having a great period of prosperity which highly contributed to Britain’s early
economic growth.
Further, the various reports and the statistics reports expresses that the
Industrial Engineering sector contribution is around £6.7 trillion to the global
economy. United Kingdom is ranked the ninth largest industrial nation contributing to
ten percent of Gross Value Added (GVA) and forty-five percent of United Kingdom’s
exportation. In addition to this long standing industrial revolution, the Industrial
Engineering sector represents sixty-eight percent of Business Research and
Development and provides fourteen percent of business investments. In general, this
revolutionary industry contributed approximately £455.6 billion of United Kingdom’s
POUND1,683 billion GDP in 2014 (27.1 percent) (Ward, 2012).

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Thus, the industrial engineering sector of the United Kingdom expresses
about a great position in the international market. The performance of the industry is
growing up rapidly and the future trends are also in the favor of the industry and
expresses about a huge growth about the company.
Company overview:
For analyzing the performance of the industrial engineering sector of UK,
Spirax- SARCO Engineering plc has been analyzed. This company is the leading
manufacturing company of steam management system, associated fluid path
technologies and peristaltic pumps. Head office of the company is in Cheltenham.
This company is registered in FTSE 250. Following is the key financial figures of the
company in last 5 years:
(Morningstar, 2018)
The changes into the financial performance of the company expresses about
the positive chnages into the company. the growth of the company is continuouslly
increasing. Further, the subsisiry companies of Spirax- SARCO Engineering plc are
also performing well in the market (Ft, 2018). This company has its presence in
international market as well and it is recognized for its quality by its customers. The
main mission of this company is to enhance the market in the international level and
it is also focusing over the customer’s loyalty of the company.
Competitors’ overview:
Further, the competitors of Spirax- SARCO Engineering plc has been
analyzed which are Hills and Smith PLC and IMI PLC. Hill and Smith PLC is the
manufacturing company of safety barrier system. This company also supplies the
products into the international market. Head office of the company is in United

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Kingdom. This company is registered in FTSE 250. Following is the key financial
figures of the company in last 5 years:
(Morningstar, 2018)
Further, the IMI PLC has been analyzed. This is the manufacturing company
of engineering products of the company. This company has its online presence and it
also supplies the products into the international market. Head office of the company
is in United Kingdom (FT, 2018). This company is registered in FTSE 250. Following
is the key financial figures of the company in last 5 years:
(Morningstar, 2018)
Thus, through the analysis over the 3 companies of Industrial engineering
sector of the company, it has been analyzed that the performance of the industry is
quite good in current scenario (Ft, 2018). Further, the financial analysis have been
done over the companies to recah over a conclusion.
Literature review: