Executive Summary Prime Bank Limited has been approached by Burke plc, a restaurant chain managing company, for a long term loan in order to expand its operations. The financial outlook of the company looks stable. Although the net profit and gross profit margin of the company has decreased during the year, the asset base of the company has significantly increased…
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Burke plc is a renowned name in the mid-priced dining restaurant industry. The company, since its inception, has flourished by leaps and bounds and has been able to establish a chain of restaurants operating in various towns all across the UK. The company had been enjoying strengthen financial outlook in the prior years, but due to the increased competition and repercussions of the recession, the management is of the view that the company requires substantial funds in order to reform its operational strategy and further increase its market share. The management plans to refurbish few old restaurants in order to attract new customers and restore its profitability. With the availability of funds, Burke plc would also be able to manage its working capital requirement in the most appropriate manner. The company can hire new workforce, acquire state of the art machine and open up new restaurants in order to enhance its market share in the industry. The closest competitor of the company is Hare plc which also holds a substantial market share of the industry. In order to acquire competitive advantage, Burke plc can utilize the funds in countering the forces of competition which are the bargaining power of customer and supplier, threats of new entrants and substitute and the rivalry among the companies. With the sanctioned loan, the company can implement and align Information Systems into its overall corporate strategy, which is likely to give an edge over the other players in the market. In addition, product and service differentiation can also be created when a company has substantial pool of funds available. Promotion is considered to be the corner stone in the marketing mix of any organization, and it is an established fact that a company always requires a substantial amount of capital in order to finance the promotional activities. Company Analysis Ratio analysis is a very accurate and reliable tool when it comes to analyzing the financial outlook of an entity. The primary reason to conduct a ratio analysis is to quantify the results of the operations of a company and compare them with that of the prior year(s) in order to assess different aspects of the financial feasibility. The ratios can be divided into various categories such as profitability, gearing and liquidity, each focusing on a different area of the financial outlook of the organization and highlighting the company’s performance. These analyses form an integral part of the financial statement analysis, especially from the investors point of view, who always strive to invest in companies having strengthen and stabilizing financial ratios and representing an upward trend. It is of great significance that the ratios must be benchmarked against a standard in order for them to possess a meaning. Keeping that into account, the comparison is usually conducted between companies portraying same business and financial risks, between industries and between different time periods of the same company. The analysis is divided into three main categorize namely Profitability, Liquidity and Gearing. Profitability ratios identify how efficiently and effectively a company is utilizing its resources and how successful it has been in generating a desired rate of return for its shareholders and investors. Liquidity
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(“Financial Statements CW Report Coursework Example | Topics and Well Written Essays - 2250 words”, n.d.)
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(Financial Statements CW Report Coursework Example | Topics and Well Written Essays - 2250 Words)
“Financial Statements CW Report Coursework Example | Topics and Well Written Essays - 2250 Words”, n.d. https://studentshare.org/finance-accounting/1425514-financial-statements-cw-report.
A balanced scorecard from the published financial statements of John Lewis
John Lewis Partnership, being one of the main retailers in UK, was created by John Spedan Lewis as a company focused on the happiness and satisfaction of the staff (John Lewis plc, 2011).
The study focuses on the performance of Morrison’s and Tesco companies for 2008 and 2009. Morrison’s is one of the top Grocery Chains in the United KingdoThe financial statement analysis centers on the four groups of ratios. The four groups are Turnover, Solvency, Profitability, and Liquidity.
The company has continued to grow over the past years as its lights have never ceased to shine bright due to there positive interaction with their customers and employees. The positive relation with their customers is due to the company’s ability to offer quality services at a fair cost.
In general, these companies issue financial statements to “provide information that allow users to reach better decisions than they would without it” (Carmichael, Whittington and Graham, 2007). There are various users who derive much needed information from these financial statements: the internal users, such as the managers, the employees, the directors and the stockholders, and the external users, such as the creditors, suppliers, customers and potential investors.
The director of the company has decided to raise additional fund through right issue. To conduct this strategic financial activity the company needs assistance from investment banks which offer service of raising finance through rights issue. Raising finance for the business expansion through rights is very popular business activity which the first step of capital investment.
Pepsi has a higher asset turnover ratio of 1.05 times as compared to Coca Cola’s asset turnover ratio of 0.7 times. This indicates that Pepsi has used its assets more productively in generating the sales than
Loans are relatively easy to acquire if there is collateral available but is a rather expensive mode of financing due to the ever increasing interest rates. Using retained earnings to finance is cheap and efficient but the disadvantage is that it will starve the company of liquidity needed to finance daily operations.
The concept of mathematical modelling is appropriately applied in the analysis section of this report. The modelling will be used to approach the problems and the questions asked in the report that involve mathematical calculations to solve and find answers
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