Managerial Finance Assignment Report

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Managerial finance

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Table of Contents
Introduction................................................................................................................................3
Ratio analysis.............................................................................................................................3
Sales growth analysis.................................................................................................................6
Cash flow analysis......................................................................................................................7
Risk analysis...............................................................................................................................8
Recommendations......................................................................................................................9
Conclusion..................................................................................................................................9
References................................................................................................................................10

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Introduction
Performance analysis is an important concept which is required to be carried for all the
company. With the help of this, the actions which are taken by the company and their results
are evaluated appropriately. This is done with the help of various tools and techniques which
are available. In the given report the analysis will be made for Daimler Company and in that,
all of the aspects in relation to the same will be taken into account. For the proper evaluation,
the comparison will be made with the previous year. In this, the competitors in the market
will also be considered and the calculation and evaluation for them will also be made. With
the help of this, there will be a comparison of all and the performance which is made by them
will be compared to identify the best company. With that other trends will also be considered
such the growth in sales. All of this will be understood appropriately with the discussion and
calculations which will be made in the report below.
Ratio analysis
The ratio is the best technique that can be used for the proper evaluation of the progress
which is made by the company. In this, there is the consideration of various areas which are
involved such as profitability, liquidity and leverage (Kabajeh, Al Nuaimat and Dahmash,
2012). They are the important aspects which shall be considered so that all of the important
information can be analyzed. In this there will be a collection of the information and various
elements will be used for the calculation of ratios. There are various formulas that will be
used for the same and they with the required calculations are shown below.
Profitability ratios:
In the business, it is required that profits shall be made in an adequate manner and for that
various aspects are required to be considered. The profit of the business is calculated by
reducing all the expenses from the revenue which is made and this is to be noted to identify
the reason for the deviations which are made (Niresh, 2012). In these various ratios will be
calculated and they are represented hereunder:
Profitability
ratios
Particulars Formula Daimler AG Volvo group BMW
2017 2018 2017 2018 2017 2018
Return on Net profit/total 16.29 11.48 19.28 20.16 16.00 12.41

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equity equity*100 % % % % % %
Net profit
margin
Net profit/sales*100 6.47% 4.53% 6.25% 6.49% 8.83% 7.39%
Gross profit
margin
Gross profit/sales*100 21.03
%
19.76
%
23.90
%
22.35
%
20.30
%
19.04
%
The calculation is made in relation to Daimler and its competitors Volvo group and BMW.
The return on equity is calculated and in that it can be noted that the same is decreasing for
Daimler and BMW but the increase is made in the Volvo group. This is because the profits
for Volvo are increasing in 2018 but for the other two companies, there is a decline in the net
profits which are made.
The gross profit margin is calculated and the same is declining in all the cases. It is due to the
increase in sales and a decline in gross profit (Al Nimer, Warrad and Al Omari, 2015). The
net profit margin is also changing and that is declining in the Daimler and BMW. All the
elements in this are considered and by this, it can be said that the profitability of Daimler and
BMW is weak in comparison to the Volvo group. There is a need to make improvements in
the same.
Liquidity ratios:
The business involves various liabilities that are required to be met and for that, it is needed
that there shall be proper liquidity which is maintained. This is to be evaluated and in this, the
assets which are available will be compared with the liabilities to be met in the coming
period. In this, the current ratio will be calculated and in that current assets and current
liabilities will be taken into account (Kirkham, 2012). The quick ratio will also be considered
and in that quick assets will be used in place of current assets and in that the assets which can
be easily converted in liquid form will be considered. The calculations for the same are made
and shown below.
Liquidity
ratios
Particulars Formula Daimler
AG
Volvo
group
BMW
2017 2018 2017 2018 201
7
201
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Current ratio Current assets/current
liabilities
1.22 1.24 1.16 1.30 1.02 1.18
Quick ratio Quick assets/current liabilities 0.93 0.94 0.85 0.94 0.85 0.99