Financial Analysis and Investment Recommendations for Aurora Plc

This report provides a comprehensive analysis of financial resource management, focusing on the case of Aurora Plc. It begins with an introduction to financial resources and their importance, followed by an examination of various financial statements like the balance sheet, cash flow statement, income statement, and statement of changes in equity. The report then delves into the interpretation of financial statements, including the application of ratio analysis, both internal and external, to assess the company's performance. Key ratios such as gearing, earnings per share, dividend yield, and price-earnings ratio are calculated and compared. Finally, the report offers specific investment recommendations for James, based on the financial analysis and market position of Aurora Plc, emphasizing the importance of compliance and strategic financial planning. The report concludes by highlighting the significance of financial resource management in making informed investment decisions.

Managing Financial
Resources

Contents
INTRODUCTION.......................................................................................................................................3
QUESTION 1..............................................................................................................................................3
Various uses of financial statements and analysis the information..........................................................3
QUESTION 2..............................................................................................................................................6
Interpret financial statements and using appropriate ratios......................................................................6
QUESTION 3..............................................................................................................................................8
Recommendations for investments..........................................................................................................8
CONCLUSION...........................................................................................................................................8
REFERENCES..........................................................................................................................................10

INTRODUCTION
Financial resources are the financial assets that a corporate entity has to maintain in order
to function efficiently in its climate. Economic resources reflect the accumulation of a company's
financial assets. Such play a significant role in the overall functioning of an enterprise. The main
aim of the report to analysis the financial position of an orgnisation and take decision of an
investment (Social, G. 2013). To better understand the concept of the report selected organisation
Aurora Plc which has been conducted their activities in departmental store. They have chain in
different countries like London and Dubai. This report consist of recognize usage of various
financial statements and analysis the knowledge that helps in decision making procedure. Along
with interpret financial statements of Aurora plc and analysis ratios on basis of internal and
external activities. At the end of the report provide recommendations with reasons in regard of
the investment.
QUESTION 1
Various uses of financial statements and analysis the information
The procedure in which a company, individual, or any other investor's money transfers
are reported in a structured manner is called financial reports or annual reports. Analysis of all of
a corporate company's relevant financial reports in an organized and comprehensible format is
considered the financial statements. The main aim of these statements that offer all the reliable
information and present actual position of company that helps all the users to understand the
financial position effectively. Most of the users taking effecting decision in regard of business
after analysis these financial statements. Performance and modification in financial situation of a
business that is needful at broad level and users make economic decisions.
Financial Statements are descriptions of a company's monetary data. The most prevalent
financial reporting also consist of balance sheet, the profit & loss statement, the financial
situation alter assertion and the interest expense assertion. Such claims are mainly used against
administrators, employees, customers, shareholders and governmental authorities. It is necessary
to draw up financial statements for individual entities, un-profit organizations, distributors,
retailers, suppliers and service jobs. The existence of the business concerned has a drastic impact

on the type of data contained in the financial reporting. The customer's objectives have a drastic
impact on the information would be looking for. Financial statements are essential as they
provide critical details regarding the fiscal health of an organization. Financial reports
supports businesses make an informed decision by demonstrating can sectors of the business
have the highest ROI (investment return). Four key financial statements are available:
Balance sheet: A balance sheet is a representation of an overall financial condition which
shows the resources, obligations and shares of the holder at a specific point in time. In many
other terms, the balance sheet displays the net worth of the company. The balance sheet might
also include data from multiple periods, so that can make a two straight seasons shoulder-to-back
correlation. These data will help monitor the results and recognize ways to create up resources
and then analysis where changes are needed. A balance sheet to assess how financial
commitments are to be met and to define the easiest methods of using liquidity to fund activities.
Cash flow statement: A cash flow statement usually breaks down the money flows of a
business and lists them in three sections for the time span. Cash flow from operating activities,
cash flow from investment operations and liquidity from financing activities. It is worth noting
that working capital is not equivalent to net profit, which involves investments that did not
include real cash movements.
Cash flow helps businesses grow, create new goods, liquidate inventory, lose value or
minimize debt, no longer how one calculates it. That's why some people, like operating income,
respect cash flow reports just as much as any other financial report or metric out here. Cash flow
is highly dependent on the condition of the cash from activities of a business, which in effect is
significantly affected by the net profits of a corporation. Higher sales, lower overheads, and
greater productivity are therefore significant sources of cash flow.
Income statement: The income statement is among the three main documents used to
measure the efficiency and employment status of a corporation (the other pair to be the share
price and the balance sheet). The profit & loss statement lists the business's produced profits and
expenditures for the whole fiscal quarter. No wonder which business is being examined, income
statements are arranged equally, but certain mandatory spending the vary depends on the sector.

Statement of changes in equity: The Declaration of Equity Adjustments indicates the
increase in the equity of an owner or shareholder for the entire reporting cycle. Often called
interest income statement, or holder capital declaration, it describes the transfer of assets that
comprise the company's capital. Income is the cost of a property, minus the interest on that
resource of all creditors. For instance, if have equity in a house your investment is the
discrepancy here between reasonable market price of the house and mortgage value of the loan
origination fee. The Declaration of Equity Adjustments is relevant as it presents crucial details
regarding capital resources that can't be found everywhere on financial reporting.
There are identified various users who are using this information in decision making procedure
such as:
 Management: Financial statements will be of enormous benefit to executives when it
comes to recognizing company growth, place and expectations. Using example, it could
be said that financial statements act as measurements and map serves the developer to the
corporate management. In the absence of details contained in the financial reports,
administration cannot effectively schedule or perform organizational and monitoring
tasks.
 Investors: Financial statements are indeed relevant for both current and potential
investors. But, from a separate investor the consumer examines at the financial condition
of the company problem. Investors are involved in two things- first, investors are willing
to invest in such a circumstance that they believe an overall financial framework is
healthy. Secondly, they like to see a great future at such field of concern. Stakeholders
pay attention to after-tax gains In the profit and loss record. Financial reporting form a
reflection representing long term investment prospects for potential investors (Schwartz,
and et.al., 2013).
 Bankers: A lender is particularly focused with the willingness to pay existing debt and
the actual performance of operations. Not only would they want upfront payment,
because they want these compensation to be returned at the right time.
 Financial analyst and researcher: Financial analysis and research personnel are
involved in reported governance guidelines financial statements or in defining other
concepts. Across these comments, a business consultant will look at management's

financial practices and provide practical suggestions for resolving financial illness, if
identified.
Therefore as per the all above discussion it is understanding that financial statements are
using to prepare all the reports on time and present all the financial information of the company
as per the requirement. These information presents in front of internal and external stakeholders.
Accordingly they are taking right decision for the investments.
QUESTION 2
Interpret financial statements and using appropriate ratios
As per the scenario it is analyzed that James wants to invest into Aurora plc so for this
wants to analysis the financial statements of the organisation. Along with analysis the ratio of
company that based on internal and external activities. Ratio analysis is a study of line items in a
company's financial statements (Shaoul, Stafford and Stapleton, 2012). Ratio evaluation is being
used to measure a variety of problems with an company, such as liquidity, operating
performance, and competitiveness. This type of research is especially helpful to non-business
analysts because their main source of truth over an entity is their financial reports. Analysis of
the ratio is much less beneficial to organizational stakeholders, who may have increased access
to more accurate organizational knowledge. There is identified internal ratio that provides
already by the organizations such as:
 Gearing ratio = 68.65%
 Earnings per share = 12p
 Dividend per share = 3.75p
 Dividend yield = 6.25%
 Dividend cover = 3.2 times
 Price earnings ratio = 5
After that calculated of the external ratio with the use of different formulas such as:
Ratios Formulas Calculations
Gearing Total debt/total interest 72.76%

Earnings per share Net income – preferred
dividends/weighted average
share o/s
15p
Dividend per share Annual dividends/No of share 4P
Dividend yield Annual dividend/Current
stock price * 100
41.78%
Dividend cover Dividend/Net income 3.75 times
Price/earnings ratio Market value per share/net
income per share
5.33
As per the above table it has been analyzed that on the basis of these ratio calculation
analysis the actual performance of an organisation. It will help to analysis all the activities in
particular manner.
Comparison between internal and external ratio
Ratios Internal External
Gearing 68.65% 72.76%
Earnings per share 12p 15p
Dividend per share 3.75p 4P
Dividend yield 6.25% 41.78%
Dividend cover 3.2 times 3.75 times
Price earnings ratio 5 5.33
There are analyzing the internal as well as external ratio of the company that presents that
external performance is good more than internal. So accordingly take all the decisions in
appropriate manner. All measures excluding debt levels display the business's high outer output
as opposed to its inner output. It's benefitted from the most effective management measures at
the maximum level. The dividend cover and yield ratios show that the profitability of the
individual business was very high in comparison with the outer ones in 2017. Aurora Plc's
efficiency was a bit poor in the outer relative to the inner output, which leads to lower

competitiveness, per the investment framework ratios. Liquidity ratios also indicate that the
company's success was very high in outdoor rather than indoor all ratios excluding debt ratios
indicate the business's good outdoor output as opposed to indoor.
QUESTION 3
Recommendations for investments
There are providing the suggestions to James in regard of the investment with the
particular reasons such as:
 All the details must be published and legislation must be complied with in all ways.
There is much legislation which these organizations are generally to obey. The widely
accepted accounting standards of the GAAP set out specific guidelines and methods for
documenting financial details those departmental entities must adopt.
 Company has good position in the market that helps to James to get growth at high level.
 • The deliberate arrangement of all administrative operations is very essential for
companies to have adequate monetary resources.
CONCLUSION
Financial resources management is data that can help to assess all costs and earnings
incurred and gained by the different services agency. This knowledge used to control resources is
compensation details given to the employees of the organization, costs generated in operational
operations, expenditure structures and concepts. Such knowledge allows the company to handle
funds that are accessible. Organizations including national medical organizations control their
money, such as funding and contributions, by defining system data was using to document costs.

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