Managerial Finance: Financial Ratios and Investment Appraisal Methods

Managerial Finance

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK ..............................................................................................................................................1
PORTFOLIO 1.................................................................................................................................1
(a) Calculation of different financial ratios for two years (2017 – 2018):..................................1
c. Recommendation in order to improve the poorly performing business..................................4
d. Limitation of financial ratios...................................................................................................5
PORTFOLIO 2.................................................................................................................................6
(a). Calculation of financial ratios for two years (2017 – 2018):................................................6
Payback Period:...........................................................................................................................6
b. Limitation of using investment appraisal technique.............................................................10
CONCLUSION..............................................................................................................................11
REFERENCES .............................................................................................................................12

INTRODUCTION
Managerial finance related to finance division that is dealing with fiscal tactics '
managerial importance. Instead of methodology, it depends on interpretation (Carbo‐Valverde,
Rodriguez‐Fernandez and Udell, 2016). Management finance deals with the responsibilities of
the fiscal manager who functions in a company. This study involves comparative analysis of
corporations named Glaxo Smith Kline plc and Reckitt Benckiser Group plc by computation
and critical evaluation of 10 significant financial ratios. It further discuss about several major
investment appraisal methods which assist managers and investors in taking financial and
investment decisions.
TASK
PORTFOLIO 1
(a) Calculation of different financial ratios for two years (2017 – 2018):
1. Current ratio = Current assets / Current liabilities
All data in £
million except
current ratio
Glaxo Smith Kline plc Reckitt Benckiser Group plc
2017 2018 2017 2018
Current assets 15907 16927 5424 4952
Current liabilities 26569 22491 6576 7614
Calculation 15907/26569 16927/22491 5424/6576 4952/7614
Current ratio 0.60 times 0.75 times 0.82 times 0.65 times
2. Quick ratio = Quick assets / Current liabilities
All data in £
million except
Quick ratio
Glaxo Smith Kline plc Reckitt Benckiser Group plc
2017 2018 2017 2018
Quick assets 10042 11121 4223 3676
Current liabilities 26569 22491 6576 7614
Calculation 10042/26569 11121/22491 4223/6576 3676/7614
1