Financial Performance Evaluation of Zurich Plc: Profitability, Liquidity, Gearing, Asset Utilization, and Investor Potential

Accounting and Financial Management
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Table of Content
Introduction......................................................................................................................................3
Task 1...............................................................................................................................................4
Prepare a report for the Board of Zurich Plc. that evaluates the performance of the company in
relation to profitability, liquidity, gearing, asset utilization, and investor potential. Your report
must be supported by the calculation of relevant ratios in the five evaluation areas mentioned
above................................................................................................................................................4
2. The directors of Zurich Plc want to use the information provided in your report for decision
making and believe ratios provide perfect information for this purpose. Therefore, critically
evaluate the limitations of ratio analysis for decision-making purposes as an additional section
within the report...............................................................................................................................8
All calculations should be clearly shown including all appropriate workings, and should be made
to the nearest £000 or two decimal places where required..............................................................8
Task 2..............................................................................................................................................9
1. Calculate using the following investment appraisal techniques, and provide recommendations
as to the economic feasibility of acquiring the machine:................................................................9
2. Critically evaluate the key benefits and limitations of each of the differing investment
appraisal techniques, supporting the response with relevant academic research as to whether each
of the differing techniques is applied in practice within a real-life business context....................12
3. You are also required to critical evaluate the possible sources of finance to fund this
investment......................................................................................................................................14
Reference.......................................................................................................................................16
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Introduction
Accounting is the dimension, dispensation and communiqué of the financial information of the
business entities and the corporations. It reveals the profit and loss for a given period and the
worth and the nature of the company’s assets. It is the statement of accounts that provide the
depiction regarding the company’s performance. The financial statements are the final reports
that are provided by the company at the end of the accounting year. It contains the trial balance,
profit and loss account and the balance sheet which predicts the financial report of the company.
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Task 1
Prepare a report for the Board of Zurich Plc. that evaluates the performance of the
company in relation to profitability, liquidity, gearing, asset utilization, and investor
potential. Your report must be supported by the calculation of relevant ratios in the five
evaluation areas mentioned above
Financial analyst is the financial head in an organization. The role of financial analyst is to
analyze the financial results of the organization( Finkler, 2016). The financial analyzer is to
check the reports of the organization in a systematic manner. Financial analyst has the ability to
interface between internal customers along with the programming and the technical staff. The
role of the financial analyst is to understand the regulations and laws regarding the financial
sections. As a financial analyst in the Board of Zurich PLC the function will be to overview the
past records of the organization along with the present prospects of the organization and provide
a blue print of the future prospects of the organization in a significant manner. The audit report
along with the minute records of the organization should be provided to the financial analyst in a
systematic manner and here the role of the financial analyst should be to analyze the same and
formulate a policy that would be beneficial and effective for the organization in the future
context (Scott and Davis, 2015). The performance of the organization can be evaluated by the
techniques which are profitability ratio, liquidity ratio, gearing ratio, asset utilization and
investor potential of the organization.
The role of the financial analyst is to operate as per the guidelines provided by the Governing
body of the organization, Board of Directors of the organization along with the internal
management of the organization (Finkler, et al., 2016). Financial analyzer is to perform the
operations of the management is to generate and monitor key performance of the organization.
Financial analyst is to aid in the quarterly, half yearly and annually the annual report of the
organization. The calculations for the compensation section are to be formulated by the financial
analyst. Cash inflow and outflow are to be checked by the financial analyst. Periodically analyze
the balance sheet of the organization is the role of the financial analyzer. The financial analyst is
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