BGC Ltd: Comprehensive Financial Analysis and Future Strategy

This report provides a comprehensive financial analysis of BGC Ltd, a cleaning services company, focusing on the impact of COVID-19 on its performance. The analysis includes a reflective report on the learning experience, ratio analysis to assess liquidity and solvency, and an evaluation of the company's cash budget with recommendations for the directors. It critically discusses the company's future plans, considering the challenges and opportunities in the current market. The report highlights the decline in financial performance due to COVID-19 and suggests strategies for improvement, such as focusing on the domestic market. Desklib provides access to this and similar solved assignments for students.

Assignment Part 1 and 2

EXECUTIVE SUMMARY
As per the above analysis it is analyzing that company financial performance after the ratio
analysis. COVID 19 impacts on the company in negative manner that presents in their financial
activity. It is suggested to move to domestic market where company get various opportunities
and generate revenues.

Contents
EXECUTIVE SUMMARY.................................................................................................................................2
INTRODUCTION...........................................................................................................................................4
PART ONE....................................................................................................................................................4
Reflective Report.....................................................................................................................................4
PART SECOND..............................................................................................................................................6
PART A.........................................................................................................................................................6
Compute the following ratios..................................................................................................................6
PART B.........................................................................................................................................................7
Provide an analysis of the cash budget making recommendations for the directors to consider...........7
PART C.........................................................................................................................................................9
Critically discuss company plans for future.............................................................................................9
CONCLUSION.............................................................................................................................................10
REFERENCES..............................................................................................................................................11
APPENDIX..................................................................................................................................................12

INTRODUCTION
This report based on the BGC Ltd Company which provides cleaning services in high street
shop and out of town shopping malls and offices. The company face issue of less liquidity in
company due to COVID 19 because company provides cleaning services in Retail Company and
offices. After COVID most of the stores and offices are closed so company not able to provide
cleaning services (Bhatiaand Tripathy, 2018). As a result, it impact on the company performance
in negative manner which is presenting in profit and loss statement. In this report consist of ratio
analysis in order to analysis liquidity, solvency performance.
PART ONE
Reflective Report
Week 1: As per the Week 1, I can analysis three companies in order to know which one is bigger
as per profit, assets and size. For this I can conduct research and carry pout results of three
companies that help me to understand which company is big. At the time of research I can face
many problems because many people do not share personal information of company. Many times
I can face communication gap because people talk in financial language which impact on my
understanding. Thus, I am not able to understand effectively financial activity in proper manner.
But during to research I can understand my financial terms in proper manner and increase my
knowledge effectively. Thus, it helps to know
Week 2: In the second week I am talking about the retail sector organisation which is establish in
UK. My task was to analysis the financial performance of company in order to take right
decision in the context of company. For this I am analysing the revenues and profitability of
company in the year 2021. During the research I am learning that during to COVID how to
survive retail sector and which type challenges are facing by them. It helps to understand
business activity and how to survive in adverse situation. In my discussion I’m presenting that
company face supply chain challenges.
Week 3: As per third week it is analysing that in this week I have not done any discussion
because I have not knowledge how to fill tender for IT Company. At the time of discussion I’m
facing various problems because I have not knowledge about it. As a result it impact on marks
but I am trying to understand that at the time of tender set cost for the different things like cost of

trip, engineer salary, cost of sub contractor and many others. On the basis of cost analysis by the
management that cost is relevant of not. After that analysis which cost is required to consider or
not.
Week 4: In this week analysis the investment appraisal techniques which helps to understand that
project is accepted or rejected. At the time of discussion apply the NPV method in which
consists of discounting factors that multiply by cash inflow. As a result it can help to take right
decision. In this week it understands by me that capital appraisal method is important to apply at
their work place which is helping to take right decision at right time. On this basis of this method
estimate that how much revenue generate by company in less time period. To take right decision
I am analysing both projects and analysis their findings. After that I am applying discounting
factor that helps to get actual NPV in positive and negative manner. After the overall analysis
take decision of selected that particular project. As a result this week helps to gain knowledge in
regard project selection and investment appraisal method selection.
Week 5: In this week I am learning about the mergers and acquisition and understand that how to
Analysis Company for the suggestion of merger and acquisition. This case study helps me to
understandthat how to company get benefits after the acquisition and before the acquisition
which factor require to consider. At the time of discussion I can realise that which points is
mainly need to consider at the time research and how to properly take right decision. Thus, it
improves my knowledge and decision making skill. After the overall analysis provide
recommendation for acquisition of not with proper justification. So for this find out key points
that helps to understand the decision of acquisition.
Week 6: In this week analysing of financial statement of company in order to determining of
concern issues that arise n the company at any time. I am analysing of financial statement of
company and identify the issues that impact on the business performance. For this require t have
knowledge about the accounting concepts which are helping to know every issues that arise any
time in business. These issues have to build experience in regard of financial statements and it
will help to take right decision at my work place. On the basis of these issues telling about to
management that how to resolve by different methodology in proper manner.

Week 7: In this week learn that when company face sudden financial problem so how it impact
on the company performance. Along with analysis of financial statement of company in different
years and compare them. It will help to identify which term effect on the financial performance.
Accordingly prepare effective strategy in order to apply in company and improve financial
performance. Moreover, analysis that how to COVID 19 impact on the company and how to firm
deal with it. In the discussion analysing of company earnings per share, consolidated income
statement, capital structure of company. For this I am analysing annual report of the company in
which provides all the detailed notes and help to take right decision. For proper analysing read
out by me 2018 and 2019 report.
From the overall analysis it is saying that by this module my actions will have an impact on
organization's financial health, and knowing how this works will enable me to participate more
successfully and make wiser choices. My private situation will benefit greatly from having a
proper strategy since it will give you greater confidence when making decisions.
PART SECOND
PART A
Compute the following ratios.
1. Gross Profit Margin
Year Formula Calculation Answer
2020 (Gross Profit / Net
sales) * 100
(989 / 14523) * 100 6.81 %
2021 (363 / 9216) * 100 3.94 %
2. Net profit Margin
Year Formula Calculation Answer
2020 (Net Profit / Net Sales)
* 100
(278 / 14523) * 100 1.91 %
2021 (-79 / 9216) * 100 -0.86 %
3. Return of Capital Employed
Year Formula Calculation Answer
2020 (EBIT/capital
employed) x 100
(455 / 3297) * 100 13.80 %
2021 (57 / 2449) * 100 2.33 %

4. Current Ratio
Year Formula Calculation Answer
2020 Current Assets/
current liabilities
2128 / 952 2.24: 1
2021 1249 / 1296 0.96: 1
5. Working Capital Cycle
Year Formula Calculation Answer
2020 Inventory days + Receivables
days – Payables days.
14.91 + 41.31 – 22.56 33.66
2021 17.77 + 48.79 – 46.34 20.22
6. Gearing Ratio
Year Formula Calculation Answer
2020 (Total debt/total equity) x 100 (400 / 2897) * 100 13.81 %
2021 (557 / 1892) * 100 29.44 %
7. Interest Coverage Ratio
Year Formula Calculation Answer
2020 EBIT/interest expense (455 / 20) 22.75
2021 (57 / 28) 2.04
From the above calculation of the ratios, it can be ascertained that the performance of the
company has been declined overall. The net and gross profit margin of the business entity has
been declining. It has reduced because of the decrease in the sales of the company which is
caused decrease in the profits of the company. Decrease in the revenue of the company has
caused decline in the net profits which has become negative in the year 2021 due to continuous
decrease in the sales of the company.Now the situation has come that it has been facing the
circumstance of negative profit means loss in the financial year 2021. It can be said that the
probability position as well as the liquidity position of the business concern is declining over the
period and it needs to be improved. The main cause of decline is that the situation of Covid – 19
has led the business to suffer adversely. All the business in the world has been disruption due to
this hazardous situation. Interest cover ratio shows that the how much paying company has in
order to pay off its interest incurring from the debts taken by the company.

PART B
Provide an analysis of the cash budget making recommendations for the directors to consider.
The cash budget is prepared after summing the operating budget that includes the
operating expenditures and the capital expenditure plan are completed. It starts with an opening
cash balance, to which money inflows are added to make cash available. Before supporting, the
cash spikes for the period are deducted to determine the money balance. The financial activities
display the required borrowings if this balance is below the organization's necessary equilibrium.
Debt repayments, including interest payments, are also included in the financial sections. The
funding action alters the money balance prior to supporting in order to calculate the closing cash
balance (Chung, 2021).
From the analysis of the cash budget, it can be asserted that the opening cash balance is
reducing overall in the next four months and is showing a negative balance. It is not a good
situation for the company as the organisation does not have cash and is not in a liquidator
position. On the other hand, if seen the receipts from the customers, it means the cash inflow is
increasing but the outflows of cash are more than the change in cash inflow. This is the reason
that the company net cash balance at the end of the month is declining and is showing
unfavorable balances in the month of October.
The opportunities that can be identified from the cash budget is that the income is very
less and if the management is been to grow the business entity than it must have to focus on
having a steady other income or it should increase at a certain rate every month. Because
sometime the business situation could be critical when there is a downfall in the market and for
overcoming that scenario the business needs cash to be in its hand for sustaining in the market
place. Also, the purchase could be on the basis of the sales because stocking much inventory
could lead to loss and irrelevance of those products if not sold.
The threats would be that the business does not hold much command of the cash balance
which is necessary and then in future in certain circumstances it could lead to taken loan or debt
from the market which will lead the organisation to pay interest. This in turn will also again
decrease the cash balance of the company (Lammer and et.al., 2020).

The implication that may be drawn for the business concern BGC Ltd is that it should
focus of increasing the cash sales because the situation has risen when the consumers and the
individuals are out of money and are buying products on credit. This is the reason that the
company should now focus mainly of the cash sales and purchases. This will lead to increase in
the receipts as will he will affect the cash balance of the entity favorably.
The alternative options that may arise for the business organisation can be suggested that
it should give discounts at a certain rate and should also enhance the inventory position of the
business organisation. This will help in increasing the cash flow of the firm and in turn will
enhance the cash balance of the firm (Dong, Kim and Ryan, 2021).
PART C
Critically discuss company plans for future
As per the meeting discussion it is saying that Gio is providing good idea to move into
domestic cleaning because after COVID people aware for cleaning and want to stay healthy. If
company provides good facility for domestic cleaning so it will be profitable. As per the current
market analysis it is analyzing that sale in retail sector is continuously fell down because most of
the retailers cannot afford to continue their shop. But in office Sector Company generate good
sales because currently offices are opened and aware for the cleaning from the employee’s point
of view.
Gross profit in retail sector rapidly fell down that impact on the company profitability like in
2018 it was 489 but in 2019 it was 504, in 2020 was 357, 2021 was 89. So there are facing
rapidly changes in gross profit which are affecting on the business activities in negative way. On
the other side in office sector also company face less profit such as, in 2018 it was 718, in 2019
was 775, in 2020 was 632 and in 2021 was 274. Thus, these results are showing that in office
sector also company facing less profitability (Jeroh, 2020).
If it is suggested that move to domestic cleaning so predicted markets in 2022 which is
presenting that in office boom is 800, static is 375 and recession 250. Domestic cash flow
presents that boom is 1100, static is 400 and recession is -200. Thus, it is presenting that chances
of boom is 25%. Static is 35% and recession is 40%.

From the overall analysis it is recommended that BGC Ltd should select second option of
shut down the retail element and move into domestic market. As per the overall calculation it is
analyzed that if BGC Ltd able to carry on retail and office sectors so face loss that impact on the
company performance in negative manner. But company select second option shut down of retail
element and moves into the domestic market. It is suggested to director to opt second option and
try to enter into domestic market. After COVID most of the people aware about the cleaning so
they are appointed cleaning service company in order to clean their houses. It will benefit the
customers as well as the management in the long run of the business. This will not only help the
organization in increasing their revenue but also helps the society by providing better services to
the people.
CONCLUSION
As per the above report it has been concluded that company face various problems after
COVID and has less liquidity and profitability. Company has prepared effective cash budget that
present actual performance of company in which presents total cash inflow and cash outflow in
effective manner.

REFERENCES
Books and Journal
Bhatia, S. and Tripathy, A., 2018. Impact of IFRS adoption on reporting of firm efficiency: case
of Indian IT firms. International Journal of Accounting, Auditing and Performance
Evaluation, 14(2-3), pp.128-158.
Chung, C.Y., 2021. DOES BOARD CHARACTERISTICS MATTER IN ACCOUNTING
PRACTICE IN THE VIETNAMESE MARKET?. Academy of Strategic Management
Journal, 20, pp.1-21.
Dong, Q., Kim, S. and Ryan, S.G., 2021. Accounting Rule–Driven Regulatory Capital
Management and its Real Effects for US Life Insurers. Available at SSRN 3975641.
Jeroh, E., 2020. Corporate financial attributes and the value of listed financial service firms: The
Nigerian evidence. Academy of Accounting and Financial Studies Journal, 24(2), pp.1-
13.
Lammer, H and et.al., 2020. Constraining the early evolution of Venus and Earth through
atmospheric Ar, Ne isotope and bulk K/U ratios. Icarus. 339. p.113551.

APPENDIX
Working Notes:
Inventory days:
Year Formula Calculation Answer
2020 (Average Inventory /
Cost of Sales) * 365
(553 / 13534) * 365 14.91
2021 (431 / 8853) * 365 17.77
Receivables days:
Year Formula Calculation Answer
2020 (Average Trade
Receivables / Credit
Sales) * 365
(1643.5 / 14523) * 365 41.31
2021 (1232 / 9216) * 365 48.79
Payables days:
Year Formula Calculation Answer
2020 (Average Payables /
Credit Purchases) *
365
(836.5 / 13534) * 365 22.56
2021 (1124 / 8853) * 365 46.34
Average Inventory:
2021 = (564 + 298) / 2 = 431
2020 = (542 + 564) / 2 = 553
Average Receivables:
2021 = (932 + 1532) / 2 = 1232
2020 = (1532 + 1755) / 2 = 1643.5
Average Payable:
2021 = (1296 + 952) / 2 = 1124

2020 = (952 + 721) / 2 = 836.5