Financial Management Assignment Solved - Doc
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Added on 2021-01-02
Financial Management Assignment Solved - Doc
Added on 2021-01-02
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Financial Management forPurchasers
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1MAIN BODY...................................................................................................................................1TASK A......................................................................................................................................1TASK B.......................................................................................................................................8CONCLUSION..............................................................................................................................13REFERENCES..............................................................................................................................14
INTRODUCTIONFinancial Management is a term which basically deals with the management of availablefinancial resources of the company in an effective and efficient manner. It is the process whichinvolves planning, organizing, controlling and monitoring of financial as well as businessresources with objective of achieving the set defined organizational goals and objectives. Timelyand accurate availability of statistical and financial information helps the management ofcompany in making important investment decision in a cost effective manner. The present reportis based on financial analysis of two companies named Capita PLC and Serco Group PLC, whichare bidding for a contract with NHS. With the help of financial ratios such as profitability,working capital etc. The financial analysis is done so as to ascertain the best suitable and liquidcompany to enter into contract with. With financial analysis, solvency, liquidity as well ascreditability will be determined. Also, the report will shed light on case study of CarillionLondon-Corby rail electrification contract. At last factors related to the financial risk, fundingsources and ethical code of conduct in relation to procurement and supply business operationswill be discussed.MAIN BODYTASK AOn the basis of cited case scenario, NHS is required financial details of two companiesnamed Capita PLC and Serco Group PLC, which are bidding for undertaking contract. Fordetermining the financial background of both the companies, financial analysis has beenperformed from the year 2015 to 2017. On the basis of financial ratios calculations such ascurrent, debt ratio etc. the liquidity, profitability and solvency position of Capita PLC and SercoGroup PLC can be ascertain. Financial Analysis of Capita PLC - Capita PLC is one of the International business process outsourcing and professionalservice rendering company with headquarter in London. It is also engaged in the business relatedto property and infrastructure consultancy division. The financial analysis of Capita PLC is doneby considering the income statement, balance sheet, and cash flow statement of the relevantaccounting period. Here, company's financial analysis is done by using following financialratios:1
Capita PLC Particulars2015 (in £m)2016 (in £m)2017 (in £m)Liquidity Ratio1. Current RatioCurrent Assets18362207.21817.7Current Liabilities2141.23413.32830.8Current Ratio = Current Assets/Current Liabilities0.8570.6470.6422. Quick RatioQuick Asset18362207.21817.7Current Liabilities2141.23413.32830.8Quick Ratio = Current Assets/ Current Liabilities0.8570.6470.642Profitability Ratio1. Gross Margin RatioGross Margin1345.4901.11052.6Net Sales4836.94368.64234.6Gross Margin Ratio = Gross Margin/ Net Sales27.82%20.63%24.86%2. Return on Capital EmployedNet Operating Profit/ Loss206.6-16.1-420.1Employed Capital3202.32792.21590.4Return on Capital Employed = Net Operating Profit/EmployedCapital6.45%-0.58%-26.41% Working capitalRatio1. Working capital RatioCurrent Assets18362207.21817.7Current Liabilities2141.23413.32830.8 Working capital Ratio = Current Assets/Current Liabilities0.8570.6470.6422. Inventory Turnover RatioNet Sales4836.94368.64234.62
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