Financial Analysis of Imperial Brand Plc

ECONOMIC AND
FINANCIAL
MANAGEMENT

Contents
Contents...........................................................................................................................................2
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
CONCLUSION..............................................................................................................................18
REFERENCES..............................................................................................................................19

INTRODUCTION
Financial management is a key aspect for companies in order to make effective utilisation of
available financial resources. There are different types of techniques and methods which are used
for making analysis of financial performance of companies (Wei, Wang, Leng and Ji, 2013).
The objective of project report is analysing financial condition of UK based company that is
Imperial brand plc. This company is involved in process of manufacturing tobacco products
whose headquarter is in Bristol, United Kingdom. The project report covers detailed information
about evaluation of different types of ratios to assess financial performance as well as role of
financial information is interpreted to take crucial decisions. The end part of report covers
information regards to key strategic steps that are needed to be taken by chosen company.
MAIN BODY
Analysis of financial performance of chosen organisation:
In accordance of given task of the project report, financial analysis of Imperial brand plc
is required to be done by help of different types of ratios. As well as some ratios are targeted to a
particular external stakeholder that is investors who invest fund in company as per the financial
condition. Herein, underneath financial analysis of above company has been done in such
manner that is as follows:
1. Profitability ratio- This can be defined as a type of ratio that is calculated by companies
in order to know about level of profitability during a particular accounting period (Julien,
2013). Under it, different types of ratios are included and some of them are mentioned
below in regards to chosen company:
 Gross profit ratio= Gross profit / net sales * 100
Year 2017 2018 2019
Gross profit 6427 6450 6240
Net sales 30247 30524 31594
Gross profit ratio (in %) 21.25 21.13 19.75

Analysis- On the basis of above prepared column chart, this can be find out that gross profit
margin of above company has been decreased in a significant manner during three years. Such as
in year 2017, the gross profit ratio was of 21.25% which reduced and became of 21.13% in year
2018. Same as in year 2019 also it decreased till 19.75%. This is indicating that company is
unable to generate higher profit after deducting cost of sales from revenues.
 Operating profit margin= Operating profit / net sales *100
Year 2017 2018 2019
Operating profit 2669 2713 2492
Net sales 30247 30524 31594
Operating profit ratio (in
%) 8.82 8.89 7.89