Financial Analysis of Bitmap Plc

Running head: FINANCIAL ANALYSIS
Financial Analysis
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1FINANCIAL ANALYSIS
Table of Contents
Part A...............................................................................................................................................2
Financial Analysis of Bitmap Plc................................................................................................2
Profitability Ratio....................................................................................................................2
Gearing Ratios:........................................................................................................................3
Liquidity Ratio:........................................................................................................................3
Asset Utilization......................................................................................................................4
Investor’s Ratio........................................................................................................................4
Working Capital...........................................................................................................................6
Part B...............................................................................................................................................7
Investment Appraisal Techniques................................................................................................7
Benefits and Limitations of Investment Appraisal Techniques.................................................10
Sources of Funding....................................................................................................................12
Part C.............................................................................................................................................14
Budgeting & demonstrating how budgets, strategic objectives & strategic plans are related...14
Budget Process...........................................................................................................................14
References......................................................................................................................................16

2FINANCIAL ANALYSIS
Part A
Financial Analysis of Bitmap Plc
The financial analysis of the Bitmap Plc. was evaluated thereby assessing the financial
performance of the company with the help of the ratio analysis. The financial performance of the
company was evaluated for the trend period 2016-2017. Various factors were analysed for the
company in respect to the profitability, liquidity, gearing, and asset utilisation and investor
potential ratio for the company. The profitability condition for the company was evaluated by
incorporating various factors like the return generated on the capital employed and the operating
profit margin for the company (Luo et al. 2015). The key profitability ratio has analysed for the
company plays a crucial role in the development and sustainability of the company in the long
term. Liquidity Ratio for the company were analysed in order to see whether the company is able
to meet the current obligations of the company. The efficiency ratio for the company was
evaluated for the company thereby assessing the utilisation and efficiency of resources for the
company. The exposure of debt on the financial statement of the company was evaluated for
assessing the financial risk associated with the company.
Profitability Ratio
Return on Capital Employed: The return on capital employed by the company shows the
profitability generated by Bitmap Company on the total capital employed by the shareholders of
the company. The return on capital employed by the company in the year 2016 was around 27%
and was around 26% in the year 2018. The slight decrease in the return was due to the constant
increase in the equity base of the company in contrast to the profitability of the company.

3FINANCIAL ANALYSIS
Operating Profit Margin: The operating profit margin for the company reflects the efficiency
of the company in earning the revenue of the company with the direct expenses of the company.
The operating profit margin for the company was around 30% in the year, which increased
consistently from the last year figures of 2016 that was around 28%.
Gearing Ratios:
Debt to Equity Ratio: The debt to equity ratio for the company shows the exposure of debt and
the weightage of debt on the capital structure of the company (Petruzzo et al. 2015). The debt to
equity ratio for the company was around 16.67% in the year 2016 and was around 22.21% in the
year 2017. The company has constantly increased the level of debt in the trend period analysed
for the company.
Interest Coverage Ratio: The interest coverage ratio shows the effect of interest on the
operating income of the company. The exposure of debt could be well assessed and the impact
the interest is creating on the profitability of the company. The interest coverage ratio for the
company was around 10.20 times in the year 2016 and was around 6.80times in the year 2017.
The interest weightage in contrast to the operating income for the company increased which
might affect the net profitability of the company.
Liquidity Ratio:
Current Ratio: The current ratio for the company shows the potential for the company in
meeting up the current liability of the company (Erasmus et al. 2016). The current ratio for the
company was around 2.77 times in the year 2016 and was around 4.69 times in the year. The
company has increased the current assets of the company significantly in contrast to the financial
assets of the company. The same can also result in the decrease in the opportunity cost of capital
for the company.