Financial Ratio Analysis and Investment Appraisal in the UK Gambling Industry

BUSINESS ACCOUNTING AND FINANCE FOR MANAGERS
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Table of Contents
Section A – Question 1..............................................................................................................4
(a) Selection and justification of at least 10 financial ratios and calculate 2 non-financial
ratios to analyse the performance and financial position of the three companies......................4
Comparison of financial ratios...................................................................................................4
Comparison of non-financial ratios..........................................................................................10
(b) Identification of the best performing company in the industry..........................................12
(c) Identification of the most poorly performing company in the industry..............................12
Section B – Question 2.............................................................................................................14
(a) Identify and explain the key stages in the capital investment decision-making process, and
the role of investment appraisal in this process.......................................................................15
(b) Identify and explain the main methods of investment appraisal used in practice (including
DCF), use numerical examples to help illustrate the key aspects............................................16
Conclusion................................................................................................................................18
Reference list............................................................................................................................19
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Introduction
It is important for every industry as well as company to measure its performance. There are
various tools that help a company in managing and measuring its financial performance and
position. One of the fundamental tools and techniques of measuring the growth, performance
and position of a company or industry is ratio analysis. This report discusses about UK’s
gambling industry, which has had a strong growth during the past few years and is considered
to be the one of the key contributors in UK’s economy. The report contains the measurement
and analysis of the performance of three major gambling industry of UK. It also discusses
about investment appraisal and its importance through explanation of the key stages in the
process of capital investment decision-making and the elucidation of the main methods for
invest appraisal.
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Section A – Question 1
(a) Selection and justification of at least 10 financial ratios and calculate 2 non-financial
ratios to analyse the performance and financial position of the three companies
Ratio analysis is one of the most effective techniques that help in measuring and analyzing
the performance of a company. Ratio analysis helps in comparison of performance, analyzing
financial position, implication of accounting figures, location of weak points of a company
and assessment of its operating efficiency (Uechi et al., 2015). Ratios can be two types –
financial ratios and non-financial ratios. The following information shows the comparison of
the financial and financial ratios of the three gambling companies Coral Group Plc,
Ladbrokes, Paddy Power Betfair Plc and William Hill Plc –
Comparison of financial ratios
Structure ratios –
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