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(DOC) International Finance Assignment

   

Added on  2020-01-07

11 Pages3340 Words709 Views
INTERNATIONALFINANCE

TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................1Financial Ratio Analysis of Barclays Bank Plc:.........................................................................1Explanation of Ratios calculated and analysis of the results:.....................................................2TASK 2............................................................................................................................................3A) Advantages and disadvantages of the three valuation methods:............................................3B) Calculations using the 3 methods to determine valuations: ..................................................4C) There may be instances where these valuations may differ:..................................................5D) Various risk exposures of the FTSE 100 currently faces:......................................................6E) Impact of economic environment on the results & influence the valuation:..........................7TASK 3............................................................................................................................................7Recommendations of above analysis:.........................................................................................7CONCLUSION................................................................................................................................8REFERENCES................................................................................................................................9

INTRODUCTIONFinance is the lifeline of every business, without is company can not exist in the market.International finance is the branch of financial economics broadly concerned with monetary andmacroeconomic interrelations between two or more countries. The report is based on theBarclays Bank Plc company which is operating in the banking and financial services. The reportdescribes the financial ratios of the bank such as liquidity ratios and profitability ratios. It showsthree methods of valuation of the selected bank such as net asset, PE ratio and dividendvaluation. It describes that the market situations, financial performance of company as well asthe economic environment is how affect to the valuations. The recommendations are alsoprovided the report for the investors.TASK 1Barclays Bank Plc. Is a British multinational banking financial services companyheadquarters in London. It is a universal bank with operations in retail, wholesale and investmentbanking, as well as wealth management, mortgage lending ans credit cards. It has operation inover 50 countries and territories and has around 48 million customers.Financial Ratio Analysis of Barclays Bank Plc:RatiosFormula2015Net sales17201Gross profit12558Net profit 623Operating profitOperating profit/ net sales*1004777Gross profit ratio GP/ net sales * 10073.01%Net profit ratio Net profit / netsales * 1004.96%Operating profit ratioOperating profit / net sales*10027.77%1

Current assets 623291Current liabilities 502089Inventory 0Prepaid expenses 0Current ratio current assets / current liabilities 1.24Quick ratioCurrent assets – (stock + prepaid expenses) /current liabilities1.24Explanation of Ratios calculated and analysis of the results:1. Gross Profit Ratio: Gross profit is a company's total revenue (equivalent to total assets)minus the cost of goods sold. Gross profit is the profit a company makes after deducting the costsassociated with making and selling its products, or the costs associated with providing itsservices (Lewis, 2015). The Barclays Bank Plc is having a good gross profit in the business. Itshows that the company easily cover cost of goods sold. The company is earning gross profit inyear 2015 is 73.01% which is a well situation of company.2. Operating Profit Ratio: Operating profit is the profit earned from a firm's normal corebusiness operations. The ratio does not include any profit earned from the firm's investments,such as earnings from firms in which the company has partial interest (Chwieroth, 2015). Thevalue is calculated after deductions of all operating expenses such as cost of goods sold, wages,overhead expense, administration expenses etc. It does not include interests and taxes. Thecompany is having the operating ratio is 27.77% which decline more than half from gross profitwhich shows that company have too much operating expenses for their services.3. Net Profit Ratio: Net profit is a company's total earnings or profit which is calculated bytaking revenues and subtracting the costs of doing business such as depreciation, interest, taxesand other expenses. Net profit is a final income of the business. The Barclays bank is notperforming well because net profit decline from 27.77%-4.96% which shows that the company ispaying more interest and it has a taxation burden.4. Current Ratio: The current ratio is a liquidity ratio which shows that company is how muchable to pay short term and long term obligations (Bodea and Hicks, 2015). To gauge this ability,2

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