Accounting Financial Report Analysis: Zoopla and Rightmove Companies

This report presents a critical financial analysis comparing Zoopla and Rightmove, two prominent companies in the digital media and real estate sectors. The analysis, conducted from the perspective of a Zoopla investor, examines the companies' balance sheets, income statements, and cash flow statements. Key financial ratios are calculated and evaluated to assess profitability, liquidity, and solvency. The report highlights Zoopla's stronger liquidity position, higher revenue, and greater net profit compared to Rightmove. The analysis also considers stock market performance, including earnings per share (EPS) growth and dividend yield. The conclusion favors Zoopla as the superior investment based on the financial indicators analyzed. The report utilizes the provided financial data to draw conclusions about each company's financial health and performance relative to its competitor.

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ACCOUNTING FINANCIAL REPORT ANALYSIS
Name of the Student:
Name of the University:
Author’s Note:

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Executive Summary
The main purpose of this report is to critically analyze the financial statements of two rival
companies as per the requirement of the assignment. The company selected for financial
statement analysis are Zoopla Company and Rightmove Company. The report will analyze
the financial reports of both the companies and then it will be commenting on the various
strength and weakness which are present in the financial reports of both the companies. The
analysis is being conducted from the view point of a shareholder or investor in Zoopla
Company. This report will be also be focusing on various ratio which depict important
characteristic of the business.

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Table of Contents
Introduction................................................................................................................................3
Balance Sheet Analysis..............................................................................................................3
Income Statement Analysis........................................................................................................5
Cash flow statement and ratio analysis......................................................................................6
Stock Market Performance.........................................................................................................8
Conclusion..................................................................................................................................9
Reference..................................................................................................................................10

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Introduction
The report focuses on the financial analysis of two companies which are Zoopla
Company and Rightmove Company. The report will aim to reveal the strength and
weaknesses of the financial reports which will also reflect analysis of important ratios
(Gitman, Juchau and Flanagan 2015). This report is being conducted from the view point of
investors of Zoopla Company who is considering whether the performance of their company
is better or their rival company which is Rightmove Company is better.
Background
Zoopla ltd is a public company which has its headquarters in London, United
Kingdom. The company is engaged in digital media business and real estate business. The
company focuses on supplying users with information about houses which are being sold,
estimated areas of properties, current value estimates in UK. Some of its services are uswitch,
price comparison, location analysis.
Rightmove plc is a public company which has its headquarter in London, United
Kingdom. This company has the largest online real estate website offering a wide range of
options to its buyers. The company is engaged in real estate business and digital media
business.
Balance Sheet Analysis
The annual balance sheet of Zoopla Company shows that it has a decent amount of
cash in at the year end 2017 which is of the amount £ 75368000 which is more than previous
years which suggests that the company has decent liquid cash available with the business and
therefore the company can meet its liquidity requirements in present. The company has lower
amount of debtors in the year end 2017 as compared to in 2016 which is £ 15000000 as

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compared to £ 36615000 (Zpg.co.uk 2018). The company’s current assets has also increased
in 2017 which is £ 113899000 as compared to 2016 figure of £ 39982000. This shows the
tremendous amount of increase in the value of current assets specially cash and cash
equivalent figures. In fact the current assets figure in 2017 is much more than previous year
figures (Bobryshev et al. 2013). Thus it shows that company has access to cash and will have
no liquidity issues. There are also presences of in tangibles assets in the balance sheet like
goodwill and patents which is consistent with past years figures. While on the liability side
the company use of long term loans has increased in 2017 which is £ 266865000 which is
more than £ 149696000 in 2016. Thus it shows the company use of debt capital in the
business. The companies total liabilities has also increased in 2017 as compared to the figure
of 2016. The company has a retained earnings of £ 79595000 in 2017 which is more than £
55752000 in 2016 which is a strenght in business as the company than has an option of using
this to reinvest in business or distribute the same as profit in future. The company’s equity
has also increased from £ 142227 in 2016 to £ 239941 which shows that the company has
issued more shares in the market (Zpg.co.uk 2018).
The annual balance sheet of Rightmove Company shows that there is an increasing
trend in the value of cash as shown in the balance sheet considering current and previous
years. The cash and cash equivalent figure is £ 13749000 which as compared to 2016 was £
8418000 and therefore it is on an increasing trend. The figure of debtor as shown in th
dbalance sheet for 2017 is £ 127000 and such figure in 2016 was £ 59000 (Rightmove.co.uk.
2018). The figure has thus increased from past years results. The total current assets figure is
also on the rise which depict a figure of £ 47699000 in 2017 which is much more than the
figure in 2016 that is £ 39941000. The company has intangible assets which are goodwill,
patents and software. The company liabilities side of balance sheet shows that the company
does not have any long term liabilities. However the total liabilities figures in 2017 is £

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52412000 which has increased from the figure of total liabilities in 2016 (Rightmove.co.uk
2018). This is mainly due to increased amount of current liabilities in the year. The equity
figure as compared to previous year has increased that is it was £ 6637000 in 2016 and £
8042000 in 2017. The company has a retained earnings of £ 21057000 which is more than the
previous year figure.
Overall Findings
The overall findings from the view point of the investor is that overall cash balance of Zoopla
Plc is much more than Righmove Plc which suggest that the liquidity of the Zoopla Plc is
much more than Rightmove Plc. The debtors of Zoopla plc is more than Rightmove plc
which suggests that the former company is liberal about its credit sales policies and has a
decent rolling period which is established the liquid cash available with the company (Al-
Najjar 2013). Zoopla Plc also uses long term debts in its capital structure which is a strong
point in the capital structure. Rightmove Plc does not do not use any debt capital in the
capital structure and thus it only uses of equity capital in its capital structure. The retained
earnings of Zoopla Plc is much more than Rightmove Plc which implies that the company has
necessary reserves which can be used in case of an emergency situation (Anjum and Malik
2013).
Income Statement Analysis
The total revenue earned by Zoopla Company in the year of 2017 is around £
244538000 which is more than the figure of 2016 that is £ 197728000. The total revenue of
past four years show that the company is doing exceptionally well as operating income and
total revenue both are on the rise since last four years (Weil, Schipper and Francis 2013). The
figure of total revenue has increased from 2015 tremendously. The operating expense of the
company is also more than what it was in the previous year. The net income however has just

6ACCOUNTING FINANCIAL REPORT ANALYSIS
marginally increased which is due to high operating costs and other expenses related to that
year (Healy and Palepu 2012).
The total revenue of Rightmove Company in the year of 2017 is around £ 219993000
which has increased more than previous year’s figure which is £ 192129000. The revenue of
the company has increased in the current year which shows that the company is doing well.
The operating expense of the company is also more than the figure which was present in
previous year. The net income figure which is £ 129542000 in 2017 as compared to a net
income figure of £ 109468000 in 2016 of Rightmove Company.
Overall Findings
The total revenue earned by Zoopla Ltd in the year 2017 is much more than
Rightmove Ltd. The reason is also clear as the former company utilizes debt capital which is
less costly as a source of capital and it also adds more capacity for production and revenue
generations. The operating expenses of Zoopla Company is naturally more because of
presence of interests on borrowings and due to more production the variable cost will also be
more. The net income figure of Zoopla Company is much more than Rightmove Company
which shows the company is generating more profits. Generally net profit is a standard of
measuring the performance of the company which is employed by shareholders. The decision
of shareholders whether to invest in the company relies on net profit and some other factors.
Cash flow statement
The cash flow statement of Zoopla Company shows that the company has positive
cash flow from operating activities and it is slightly more than previous year’s figure. The
cash from operating activities is £ 37409000 in 2017. The cash from investing activities is
negative due to acquisitions of subsidiaries which the company has made during the year.

7ACCOUNTING FINANCIAL REPORT ANALYSIS
The net cash flow from all activities is also a positive figure (Bhandari and Iyer 2013). The
cash flow statement shows that the company is performing well.
The cash flow statement of Rightmove Company shows that the company has net
cash flow which is positive. However the company’s cash from operating activities has not
much grown from the last year. The cash from investing activities is £ 129542000 which is
much more than the previous year which shows that the company is more involved in
investing activities mainly money market deposits.
Overall Findings
Zoopla Company has a better Cash flow as compared to Rightmove Company which
are an indicators to the stakeholders that Zoopla Company has the upperhand over its rivals
Rightmove Company.
Ratio analysis
The profitability ratios of the company consist of gross margin, net margin and
operating margin. The profitability ratio of the company shows that the company is
performing well. As per the profitability ratios the company is earning profits and the profits
are showing growth. The liquidity ratio consists of quick ratio, current ratio which are key
indicators of the performance of the company. Zoopla Company has sufficient cash reserves
and therefore the company has no problem of liquidity. Gearing ratios show the use of debt
capital in comparison to equity. As per the balance sheet analysis the company uses
significant amount of debt capital in its capital structure.
The liquidity ratio is not favourable for the company as the working capital by
total capital is in negative. This means that the company has low working capital which
suggests that the company has liquidity issues and the quick ratio depict that it is 0.9 which is

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less than 1, therefore the company is having some problems meeting their current expenses.
The profitability ratios however show an exceptional good performance starting from the
gross profit margin to net profit margin. Every profitability ratio show an increasing trend
except EBIT margin which has slightly decreased. The balance sheet analysis show that the
company does not uses debt in their capital structure.
Overall Findings
The ratios analysis of both the company depict a similar results, however the
profitability ratios show that Rightmove Company is better than Zoopla Company. The ratio
analysis of both the company shows favourable results.
Stock Market Performance
The growth rate in EPS in Zoopla Company has decreased and shows negative growth rate
while the growth rate in EPS in Rightmove Company is increasing and shows promising
growth rate. Zoopla company ‘s dividend yield is much more than the Rightmove company
which shows the Zoopla company is paying a dividend which is more as compared to its
prices of shares than Rightmove company.
2016 2015 2014
-10.00%
0.00%
10.00%
20.00%
30.00%
40.00%
50.00% 43.16%
21.57%
-5.56%
21.00% 16.68%
33.07%
EPS Growth
Axis Title
Figure 1: Chart showing EPS Growth

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Conclusion
Thus it is clear from the analysis of the financial report of Zoopla Company in
comparison to Rightmove Company that the performance of Zoopla Company is better than
Rightmove Company. Zoopla Company has a better liquidity conditions with a better net
profit as compared to Rightmove Company. Zoopla company has retained earnings which
can be used by the company in case of an emergency situations. The investors will be
naturally be attracted to Zoopla Company as most of the financial indicators. Therefore it is
clear that the performance of the Zoopla Company is better than Rightmove Company.

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Reference
Al-Najjar, B., 2013. The financial determinants of corporate cash holdings: Evidence from
some emerging markets. International business review, 22(1), pp.77-88.
Anjum, S. and Malik, Q.A., 2013. Determinants of corporate liquidity-An analysis of cash
holdings. Journal of Business and Management, 7(2), pp.94-100.
Bhandari, S.B. and Iyer, R., 2013. Predicting business failure using cash flow statement based
measures. Managerial Finance, 39(7), pp.667-676.
Bobryshev, A.N., Uryadova, T.N., Lyubenkova, E.P., Yakovenko, V.S. and Alekseeva, O.A.,
2014. Analytical and management approaches to modeling of the accounting balance
sheet. Life Science Journal, 11(8), pp.502-506.
Gitman, L.J., Juchau, R. and Flanagan, J., 2015. Principles of managerial finance. Pearson
Higher Education AU.
Healy, P.M. and Palepu, K.G., 2012. Business analysis valuation: Using financial statements.
Cengage Learning.
Rightmove.co.uk. (2018). Rightmove.co.uk. [online] Available at:
http://www.rightmove.co.uk/ [Accessed 6 Jan. 2018].
Weil, R.L., Schipper, K. and Francis, J., 2013. Financial accounting: an introduction to
concepts, methods and uses. Cengage Learning.
Zpg.co.uk. (2018). The consumer champion at the heart of the home. [online] Available at:
https://www.zpg.co.uk/ [Accessed 6 Jan. 2018].