Evaluating Financial Performance of Companies
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Added on 2023-04-07
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This research evaluates the financial performance of the UK and US car manufacturing industries using financial ratios and models. It compares the profitability, liquidity, efficiency, and solvency of selected companies from both industries.
Evaluating Financial Performance of Companies
Added on 2023-04-07
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Running head: EVALUATING FINANCIAL PERFORMANCE OF COMPANIES
Evaluating Financial Performance of Companies
Name of the Student:
Name of the University:
Author’s Note:
Course ID:
Evaluating Financial Performance of Companies
Name of the Student:
Name of the University:
Author’s Note:
Course ID:
1EVALUATING FINANCIAL PERFORMANCE OF COMPANIES
Abstract:
Long-term sustainability, development and growth depending on a sound platform of an
organisation need effective decisions and superior performance. These needs mainly depend
on holistic assessment within the organisation. In addition, for sustaining long-term
prosperity, organisations are required to base their businesses on credible and accurate data
that could be gathered from financial analysis. For conducting the current research, the
researcher has used a number of financial tools like financial ratios and models like economic
value added and market value added for evaluating the financial performance of the UK and
US car manufacturing industries. The researcher has used the philosophy of positivism,
descriptive research design and deductive research approach for arriving at the research
outcomes. The three organisations selected from the UK car manufacturing industry include
Aston Martin, Jaguar and Rolls Royce, while the three organisations chosen from the US car
manufacturing industry are General Motors Company, Fiat Chrysler Automobiles and Tesla
Inc.
It has been analysed that in terms of profitability and liquidity, the UK car manufacturing
industry is having competitive edge over the US car manufacturing industry, while the
situation is just the opposite in terms of efficiency in the global market. Finally, in terms of
solvency, both industries are struggling to maintain stable position in the global market.
Therefore, the financial models have been used for estimating their future growth in the
market.
Abstract:
Long-term sustainability, development and growth depending on a sound platform of an
organisation need effective decisions and superior performance. These needs mainly depend
on holistic assessment within the organisation. In addition, for sustaining long-term
prosperity, organisations are required to base their businesses on credible and accurate data
that could be gathered from financial analysis. For conducting the current research, the
researcher has used a number of financial tools like financial ratios and models like economic
value added and market value added for evaluating the financial performance of the UK and
US car manufacturing industries. The researcher has used the philosophy of positivism,
descriptive research design and deductive research approach for arriving at the research
outcomes. The three organisations selected from the UK car manufacturing industry include
Aston Martin, Jaguar and Rolls Royce, while the three organisations chosen from the US car
manufacturing industry are General Motors Company, Fiat Chrysler Automobiles and Tesla
Inc.
It has been analysed that in terms of profitability and liquidity, the UK car manufacturing
industry is having competitive edge over the US car manufacturing industry, while the
situation is just the opposite in terms of efficiency in the global market. Finally, in terms of
solvency, both industries are struggling to maintain stable position in the global market.
Therefore, the financial models have been used for estimating their future growth in the
market.
2EVALUATING FINANCIAL PERFORMANCE OF COMPANIES
Acknowledgements:
I would like to express my sincere gratitude and thank the following people for their immense
help and support, as without their assistance, it would not be possible for me to complete this
research.
To my supervisor, your constant direction and guidance enabled me to carry out my
research effectively and diligently
To my dearest friends and family, as without their financial and emotional support,
the research study would not have been possible
Finally, I would like to thank sincerely to all the teaching staffs as well as library
staffs in my college/university
Acknowledgements:
I would like to express my sincere gratitude and thank the following people for their immense
help and support, as without their assistance, it would not be possible for me to complete this
research.
To my supervisor, your constant direction and guidance enabled me to carry out my
research effectively and diligently
To my dearest friends and family, as without their financial and emotional support,
the research study would not have been possible
Finally, I would like to thank sincerely to all the teaching staffs as well as library
staffs in my college/university
3EVALUATING FINANCIAL PERFORMANCE OF COMPANIES
Table of Contents
Chapter 1: Introduction..............................................................................................................8
1.1 Background of the research..............................................................................................8
1.2 Problem statement............................................................................................................9
1.3 Significance of the research.............................................................................................9
1.4 Research objectives........................................................................................................10
1.5 Research questions.........................................................................................................11
Chapter 2: Literature Review...................................................................................................12
2.0 Introduction....................................................................................................................12
2.1 Financial Analysis..........................................................................................................12
2.1.1 Financial Analysis Objectives.................................................................................12
2.2 Users of the Financial Statements..................................................................................13
2.3 Tools of Financial Statement Analysis..........................................................................14
2.3.1 Financial Ratio Analysis.........................................................................................14
2.3.2 Shareholder Value Added (SVA)............................................................................16
2.3.3 Market Value Added...............................................................................................16
2.3.4 Economic Value Added (EVA)..............................................................................17
2.4 Summary........................................................................................................................17
Chapter 3: Research Methodology...........................................................................................18
3.1 Introduction:...................................................................................................................18
3.2 Research philosophy:.....................................................................................................18
Table of Contents
Chapter 1: Introduction..............................................................................................................8
1.1 Background of the research..............................................................................................8
1.2 Problem statement............................................................................................................9
1.3 Significance of the research.............................................................................................9
1.4 Research objectives........................................................................................................10
1.5 Research questions.........................................................................................................11
Chapter 2: Literature Review...................................................................................................12
2.0 Introduction....................................................................................................................12
2.1 Financial Analysis..........................................................................................................12
2.1.1 Financial Analysis Objectives.................................................................................12
2.2 Users of the Financial Statements..................................................................................13
2.3 Tools of Financial Statement Analysis..........................................................................14
2.3.1 Financial Ratio Analysis.........................................................................................14
2.3.2 Shareholder Value Added (SVA)............................................................................16
2.3.3 Market Value Added...............................................................................................16
2.3.4 Economic Value Added (EVA)..............................................................................17
2.4 Summary........................................................................................................................17
Chapter 3: Research Methodology...........................................................................................18
3.1 Introduction:...................................................................................................................18
3.2 Research philosophy:.....................................................................................................18
4EVALUATING FINANCIAL PERFORMANCE OF COMPANIES
3.3 Research approach:........................................................................................................18
3.4 Research design:.............................................................................................................19
3.5 Sampling and sample size:.............................................................................................19
3.6 Data collection and analysis:..........................................................................................20
3.7 Timeframe of the research:............................................................................................20
3.8 Summary:.......................................................................................................................21
Chapter 4: Data Analysis.........................................................................................................22
4.1 Introduction:...................................................................................................................22
4.2 Financial analysis of the car manufacturing companies in UK and USA:.....................22
4.2.1 Profitability analysis:..............................................................................................22
4.2.2 Liquidity analysis:...................................................................................................29
4.2.3 Efficiency analysis:.................................................................................................34
4.2.4 Solvency analysis:...................................................................................................41
4.3 Application of financial models in the selected car manufacturing organisations:.......48
4.4 Summary:.......................................................................................................................52
Chapter 5: Conclusion and Recommendations........................................................................53
5.1 Conclusion:....................................................................................................................53
5.2 Linking with the research objectives:............................................................................53
5.3 Recommendations:.........................................................................................................55
5.4 Limitations and future scope of the research:................................................................55
References and Bibliographies:................................................................................................56
3.3 Research approach:........................................................................................................18
3.4 Research design:.............................................................................................................19
3.5 Sampling and sample size:.............................................................................................19
3.6 Data collection and analysis:..........................................................................................20
3.7 Timeframe of the research:............................................................................................20
3.8 Summary:.......................................................................................................................21
Chapter 4: Data Analysis.........................................................................................................22
4.1 Introduction:...................................................................................................................22
4.2 Financial analysis of the car manufacturing companies in UK and USA:.....................22
4.2.1 Profitability analysis:..............................................................................................22
4.2.2 Liquidity analysis:...................................................................................................29
4.2.3 Efficiency analysis:.................................................................................................34
4.2.4 Solvency analysis:...................................................................................................41
4.3 Application of financial models in the selected car manufacturing organisations:.......48
4.4 Summary:.......................................................................................................................52
Chapter 5: Conclusion and Recommendations........................................................................53
5.1 Conclusion:....................................................................................................................53
5.2 Linking with the research objectives:............................................................................53
5.3 Recommendations:.........................................................................................................55
5.4 Limitations and future scope of the research:................................................................55
References and Bibliographies:................................................................................................56
5EVALUATING FINANCIAL PERFORMANCE OF COMPANIES
Table of Figures
Figure 4.1: Profitability ratios of Aston Martin for the years 2013-2017................................23
Figure 4.2: Profitability ratios of Jaguar for the years 2013-2017...........................................24
Figure 4.3: Profitability ratios of Rolls Royce for the years 2013-2017..................................25
Figure 4.4: Profitability ratios of General Motors Company for the years 2013-2017............26
Figure 4.5: Profitability ratios of Fiat Chrysler Automobiles for the years 2013-2017...........27
Figure 4.6: Profitability ratios of Tesla Inc for the years 2013-2017.......................................28
Figure 4.7: Liquidity ratios of Aston Martin for the years 2013-2017....................................29
Figure 4.8: Liquidity ratios of Jaguar for the years 2013-2017...............................................30
Figure 4.10: Liquidity ratios of General Motors Company for the years 2013-2017..............32
Figure 4.11: Liquidity ratios of Fiat Chrysler Automobiles for the years 2013-2017.............33
Figure 4.12: Liquidity ratios of Tesla Inc for the years 2013-2017.........................................34
Figure 4.13: Efficiency ratios of Aston Martin for the years 2013-2017.................................35
Figure 4.15: Efficiency ratios of Rolls Royce for the years 2013-2017..................................37
Figure 4.16: Efficiency ratios of General Motors Company for the years 2013-2017............39
Figure 4.17: Efficiency ratios of Fiat Chrysler Automobiles for the years 2013-2017...........40
Figure 4.18: Efficiency ratios of Tesla Inc for the years 2013-2017.......................................41
Figure 4.19: Solvency ratios of Aston Martin for the years 2013-2017..................................42
Figure 4.20: Solvency ratios of Jaguar for the years 2013-2017.............................................43
Figure 4.21: Solvency ratios of Rolls Royce for the years 2013-2017....................................44
Figure 4.22: Solvency ratios of General Motors Company for the years 2013-2017..............45
Figure 4.23: Solvency ratios of Fiat Chrysler Automobiles for the years 2013-2017.............46
Figure 4.24: Solvency ratios of Tesla Inc for the years 2013-2017.........................................47
Table of Figures
Figure 4.1: Profitability ratios of Aston Martin for the years 2013-2017................................23
Figure 4.2: Profitability ratios of Jaguar for the years 2013-2017...........................................24
Figure 4.3: Profitability ratios of Rolls Royce for the years 2013-2017..................................25
Figure 4.4: Profitability ratios of General Motors Company for the years 2013-2017............26
Figure 4.5: Profitability ratios of Fiat Chrysler Automobiles for the years 2013-2017...........27
Figure 4.6: Profitability ratios of Tesla Inc for the years 2013-2017.......................................28
Figure 4.7: Liquidity ratios of Aston Martin for the years 2013-2017....................................29
Figure 4.8: Liquidity ratios of Jaguar for the years 2013-2017...............................................30
Figure 4.10: Liquidity ratios of General Motors Company for the years 2013-2017..............32
Figure 4.11: Liquidity ratios of Fiat Chrysler Automobiles for the years 2013-2017.............33
Figure 4.12: Liquidity ratios of Tesla Inc for the years 2013-2017.........................................34
Figure 4.13: Efficiency ratios of Aston Martin for the years 2013-2017.................................35
Figure 4.15: Efficiency ratios of Rolls Royce for the years 2013-2017..................................37
Figure 4.16: Efficiency ratios of General Motors Company for the years 2013-2017............39
Figure 4.17: Efficiency ratios of Fiat Chrysler Automobiles for the years 2013-2017...........40
Figure 4.18: Efficiency ratios of Tesla Inc for the years 2013-2017.......................................41
Figure 4.19: Solvency ratios of Aston Martin for the years 2013-2017..................................42
Figure 4.20: Solvency ratios of Jaguar for the years 2013-2017.............................................43
Figure 4.21: Solvency ratios of Rolls Royce for the years 2013-2017....................................44
Figure 4.22: Solvency ratios of General Motors Company for the years 2013-2017..............45
Figure 4.23: Solvency ratios of Fiat Chrysler Automobiles for the years 2013-2017.............46
Figure 4.24: Solvency ratios of Tesla Inc for the years 2013-2017.........................................47
6EVALUATING FINANCIAL PERFORMANCE OF COMPANIES
7EVALUATING FINANCIAL PERFORMANCE OF COMPANIES
Table of Tables
Table 3.1: Timeframe of the research......................................................................................21
Table 4.1: Profitability ratios of Aston Martin for the years 2013-2017.................................22
Table 4.2: Profitability ratios of Jaguar for the years 2013-2017............................................23
Table 4.3: Profitability ratios of Rolls Royce for the years 2013-2017...................................24
Table 4.4: Profitability ratios of General Motors Company for the years 2013-2017.............26
Table 4.5: Profitability ratios of Fiat Chrysler Automobiles for the years 2013-2017............27
Table 4.6: Profitability ratios of Tesla Inc for the years 2013-2017........................................27
Table 4.7: Liquidity ratios of Aston Martin for the years 2013-2017......................................29
Table 4.8: Liquidity ratios of Jaguar for the years 2013-2017.................................................30
Table 4.9: Liquidity ratios of Rolls Royce for the years 2013-2017.......................................30
Figure 4.9: Liquidity ratios of Rolls Royce for the years 2013-2017......................................31
Table 4.10: Liquidity ratios of General Motors Company for the years 2013-2017...............32
Table 4.11: Liquidity ratios of Fiat Chrysler Automobiles for the years 2013-2017..............32
Table 4.12: Liquidity ratios of Tesla Inc for the years 2013-2017..........................................33
Table 4.13: Efficiency ratios of Aston Martin for the years 2013-2017..................................35
Table 4.14: Efficiency ratios of Jaguar for the years 2013-2017.............................................36
Figure 4.14: Efficiency ratios of Jaguar for the years 2013-2017............................................36
Table 4.15: Efficiency ratios of Rolls Royce for the years 2013-2017....................................37
Table 4.16: Efficiency ratios of General Motors Company for the years 2013-2017..............38
Table 4.17: Efficiency ratios of Fiat Chrysler Automobiles for the years 2013-2017.............39
Table 4.18: Efficiency ratios of Tesla Inc for the years 2013-2017.........................................40
Table 4.19: Solvency ratios of Aston Martin for the years 2013-2017....................................42
Table 4.20: Solvency ratios of Jaguar for the years 2013-2017...............................................42
Table 4.21: Solvency ratios of Rolls Royce for the years 2013-2017.....................................43
Table of Tables
Table 3.1: Timeframe of the research......................................................................................21
Table 4.1: Profitability ratios of Aston Martin for the years 2013-2017.................................22
Table 4.2: Profitability ratios of Jaguar for the years 2013-2017............................................23
Table 4.3: Profitability ratios of Rolls Royce for the years 2013-2017...................................24
Table 4.4: Profitability ratios of General Motors Company for the years 2013-2017.............26
Table 4.5: Profitability ratios of Fiat Chrysler Automobiles for the years 2013-2017............27
Table 4.6: Profitability ratios of Tesla Inc for the years 2013-2017........................................27
Table 4.7: Liquidity ratios of Aston Martin for the years 2013-2017......................................29
Table 4.8: Liquidity ratios of Jaguar for the years 2013-2017.................................................30
Table 4.9: Liquidity ratios of Rolls Royce for the years 2013-2017.......................................30
Figure 4.9: Liquidity ratios of Rolls Royce for the years 2013-2017......................................31
Table 4.10: Liquidity ratios of General Motors Company for the years 2013-2017...............32
Table 4.11: Liquidity ratios of Fiat Chrysler Automobiles for the years 2013-2017..............32
Table 4.12: Liquidity ratios of Tesla Inc for the years 2013-2017..........................................33
Table 4.13: Efficiency ratios of Aston Martin for the years 2013-2017..................................35
Table 4.14: Efficiency ratios of Jaguar for the years 2013-2017.............................................36
Figure 4.14: Efficiency ratios of Jaguar for the years 2013-2017............................................36
Table 4.15: Efficiency ratios of Rolls Royce for the years 2013-2017....................................37
Table 4.16: Efficiency ratios of General Motors Company for the years 2013-2017..............38
Table 4.17: Efficiency ratios of Fiat Chrysler Automobiles for the years 2013-2017.............39
Table 4.18: Efficiency ratios of Tesla Inc for the years 2013-2017.........................................40
Table 4.19: Solvency ratios of Aston Martin for the years 2013-2017....................................42
Table 4.20: Solvency ratios of Jaguar for the years 2013-2017...............................................42
Table 4.21: Solvency ratios of Rolls Royce for the years 2013-2017.....................................43
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