Overview of Strategic Financial Analysis

STRATEGIC FINANCIAL ANALYSIS

Table of Contents
INTRODUCTION....................................................................................................... 4
Overview of Strategic Financial Analysis.......................................................................4
Brief Background of Companies You Select (For Illustrative Purposes)..................................4
Purpose of Report.................................................................................................... 5
STRATEGIC FINANCIAL ANALYSIS – TRADITTIONAL METHODS.................................5
2.1 Ratio Analysis – 3 Year, Year on Year Trend Analysis..................................................5
2.1.1 Profitability..................................................................................................... 5
2.1.2 Liquidity........................................................................................................ 7
2.2.3 Solvency........................................................................................................ 8
2.2.4 Efficiency....................................................................................................... 9
2.2.5 Investor.......................................................................................................... 9
2.2 Common Size Statement Analysis.............................................................................10
2.2.1 Vertical Common Size Analysis.........................................................................10
2.2.2 Horizontal Common Size Analysis......................................................................10
2.3 DuPont Analysis............................................................................................... 10
ANALYSIS AND EVALUATION OF LIMITATIONS AND STRENGTHS OF METHODS.......10
3.1 Ratio Analysis.................................................................................................. 10
3.1.1 Ratio Analysis – Limitations and Strengths............................................................11
Advantages.......................................................................................................... 11
Disadvantages....................................................................................................... 11
3.1.2 Contemporary Methods Proposed to Minimize Limitations of Ratio Analysis....................11
3.2 Vertical Size Statement Analysis...........................................................................11
Advantages.......................................................................................................... 11
Disadvantages....................................................................................................... 12
3.2.1 Common Size Statement Analysis – Limitations and Strengths...................................12
3.2.2 Contemporary Methods Proposed to Minimize Common Size Statement Analysis............12
Horizontal Common Size Analysis............................................................................. 12
Advantages.......................................................................................................... 12
Disadvantages....................................................................................................... 13
3.3 DuPont Analysis............................................................................................... 13
3.3.1 Common Size Statement Analysis – Limitations and Strengths...................................13
3.3.2 Contemporary Methods Proposed to Minimize Common Size Statement Analysis............13
Advantages.......................................................................................................... 13

Disadvantages....................................................................................................... 14
CONCLUSIONS AND RECOMMENDATIONS..............................................................14
4.1 Summary of Key Findings...................................................................................14
4.2 Suggest the Best Methods and/or Combination of Methods to be used.............................14
APPENDICES......................................................................................................... 15
REFERENCES......................................................................................................... 18

INTRODUCTION
Overview of Strategic Financial Analysis
Strategic financial analysis is one of the most common analyses that has been undertaken to
give a detailed idea of how companies have performed over the period of few years and what
is their current position with respect to the competitors. The strategic financial analysis is a
powerful, value-creating framework that which helps the top level management to devise the
creative business solutions, analyse performance, and value a business. From the vantage
point of seniors, this framework is helpful in making management more aware towards the
operations of the company. This also helps in taking the business decision form the point of
view of the investors, and it lets them take an outside-in perspective of an acquirer trying to
value a target or an activist or private equity investor looking to drive value creation in a
company (Ratiosys.com. 2019).
Brief Background of Companies You Select (For Illustrative Purposes)
Tate and Lyle PLC is a British-headquartered, worldwide provider of nourishment and
refreshment fixings to mechanical markets. It was initially a sugar refining business, however
from the 1970s started to enhance, in the end stripping its sugar business in 2012. It has some
expertise in transforming crude materials, for example, corn and custard into fixings that
include taste, surface, and supplements to nourishment and refreshments. It is recorded on the
London Stock Exchange and is a constituent of the FTSE 250 Index (Tate and Lyle, 2018).
Wolseley UK (some time ago Wolseley Centers) is the holding organization for a few surely
understood developers traders in the United Kingdom, including Plumb Center. Wolseley UK
is the nation's biggest provider of building materials, with exchange clients (handymen and
manufacturers) representing the biggest extent of its deals. It does, notwithstanding, have