Comparative Financial Analysis of Stagecoach and National Express
Added on 2020-01-23
12 Pages3222 Words42 Views
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Financial Management
ContentsINTRODUCTION......................................................................................................................4Analyzing the financial performance of National Express Plc for the year of 2015.............4Justifying possible purchase price for the target market by using business valuationtechnique................................................................................................................................7Critically evaluate the alternative methods which are available to Stagecoach forpurchasing the shares of National Express Plc......................................................................8Discussing the relevance of dividend policies which are employed by the two companies10CONCLUSION........................................................................................................................11REFERENCES.........................................................................................................................12
INTRODUCTIONFinancial management is highly concerned with the effective and efficient use ormanagement of money. Moreover, company can accomplish its goals and objectives whenthey make optimum use of money. In this, field of financial management assists business unitin employing fund in the suitable kind of projects. Besides this, it also provides help inmaking balance in the financial structure and thereby ensures effectual management of cash(Financial management, 2016). The present report is based on the case scenario in whichStagecoach made an offer in relation to the purchasing all the shares of National Express Plc.Thus, National Express Plc is the leading British multinational transport company whichoffers bus, coach, and train and tram services in UK. Further, Stagecoach also operates insimilar industry and both the companies are listed on the recognized stock exchange such asFTSE 250 Index. In this regard, the present will provide information to the shareholders ofNational Express Plc in relation to the potential purchase of Stagecoach.Analyzing the financial performance of National Express Plc for the year of 2015Ratio analysis may be served as most effectual tool which helps in analyzing thefinancial health and performance of the business organization (Finkler and et.al., 2016). Bytaking into account such tool company and their stakeholders can evaluate the profitability,liquidity and solvency aspect of the firm. Usually, investors undertake ratio analysis toolbefore making investment decision (Titman, Keown and Martin, 2015). Moreover,shareholders invest money with the aim to earn high in form of dividend. On the basis of thecited case situation, Stagecoach Group plc wants to invest money in the shares of NationalExpress Plc. In this, the below mentioned ratio analysis will provide deeper insight toStagecoach plc about the financial aspects of National Express Plc.Ratio analysis of National Express Plc for the year of 2015 is as follows:ParticularsFormula2015Sales revenue1920Gross profit1860Net profit107Profitability ratioGross profit ratio (GPR)GP / Net sales * 1001860 /1920 * 100 = 96.88%Net profit ratio (NPR)NP / Net sales * 100107 /1920 * 100 = 5.57%Current assets (CA)329Inventory23Prepaid expenses52
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