Financial Analysis of T plc: Profitability, Liquidity, Working Capital Management and Investment

BUSINESS PERFORMANCE

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Financial Analysis of T plc..........................................................................................................3
Profitability..................................................................................................................................3
Liquidity.......................................................................................................................................4
Working Capital Management.....................................................................................................4
Investment ..................................................................................................................................4
Investments in T. plc....................................................................................................................5
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................1

INTRODUCTION
Financial analysis is a process that evaluates the business, budgets and financial
transaction which determines the performance and suitability of a company.
This report shows the financial analysis of T plc by evaluating its various aspects such as
profitability, liquidity and working capital management.
It is used by investors, shareholders in identifying the financial position of the company and take
investment decisions accordingly by analysing the profitability and liquidity of the company
using ratio analysis.
MAIN BODY
Financial Analysis of T plc
Financial analysis is a process that evaluates the business, budgets and financial
transaction which determines the performance and suitability of a company. It is used by
investors, shareholders in identifying the financial position of the company and take investment
decisions accordingly by analysing the profitability and liquidity of the company using ratio
analysis.
Profitability
Profitability ratios are used to identify the firm's ability to earn profits from its operations
and sales (Husain, 2020). It helps in indicating how efficiently a firm generates revenue and
value for the shareholders.
From the given data, it can be analysed that T plc has favourable profitability ratios.
Gross profit margin of the past three years are 39% in 2018, 40% in 2019 and in 2020 which is
above the average industry ratio that is 37% . Similarly, the net profit margin of consecutive
three years i.e. 2018, 2019 and 2020 are 5.8, 5.9 and 6.05 respectively that are above the average
industry which is 4%. Also, return on shareholder's fund is 15%, 15.25% and 16% in 2018,
2019 and 2020 is also high from the average industry ratio that stands at 12%. And also, the
dividend yield ratio in 2018, 2019 and 2020 that is 3%, 4% and 3% is equal and above to the
average industry ratio which is 3% So from the analysis it can be evaluated that T plc is
generating high profit margins and is able to meet the requirements of the shareholders by
providing them with higher returns.