TASK: ONE Choose a listed company on the London Stock Exchange (LSE) or in any other globally recognized stock exchange in any of the following sectors: Retailers, Food &Beverages, Health Care, Oil & Gas, Pharmaceuticals & Biotech, Telecommunications and Utilities. Obtain the annual reports of the company and one of its main competitors for the latest five years from its website or other sources. a) Write an introductory report on the activities of the company and its position in the industry with respect to its competitor. b) Critically compare and analyse their financial performance over the last five years. ( i.e. the major company and its main competitor company) c) If you were going to buy one of these companies’ shares, which one would you choose? Explain your reasons. d) State clearly any problems, limitations and assumptions that you need to make to answer the questions. Table of contents :  Introduction of the main company & competitor company activities. Critical comparison and analyse of financial performance over the last five years Explaining the reasons for the purchase of either company shares. • Explaining clearly any problems, limitations and assumptions made in answer the questions. MARKING SCHEME : 1. Research-informed Literature – 10 marks 2. Knowledge and Understanding of Subject – 10 marks[ introductory report on the activities of the company and its position in the industry with respect to its competitor.] 3.) Analysis; Analysis, evaluation and synthesis; logic, argument and judgement; analytical reflection; organisation of ideas and evidence: Liquidity, Profitability, Efficiency, Capital structure and Stock market performance (50 marks) 4.) Practical Application and Deployment: (20 marks) Problems, limitations and assumptions of the analysis  Recommendation for investment  5.) Skills for Professional Practice: Attributes in professional practice: individual and collaborative working; presentation and organisation. (05 marks) Answer plan-1 : Introduction Provide a brief summary of chosen two companies business activities and a brief financial summary in terms of its cash flows, profitability, assets, liabilities etc. over the last 05 years! Using suitable graphs & charts! Analysis : 50 Marks Answer Plan : a) Critically compare and analyse their financial performance over the last five years. [50 marks] Answer plan -1:  You need to calculate and critically comment on the financial performance over a FIVE year period starting from the latest year. This should be done for each company and between each company. You may use graphs, tables or any other forms of presentation of the ratios to support your analysis). 1.Calculate & critically explain the following ratios to ascertain each company’s financial performance: a) Profitability ratios b) Investor ratios c) Efficiency ratios d) Liquidity ratios e) Capital structure ratios Practical Application & Deployment – 20% a.) Recommendation to buy one of these companies’ shares: If the target company’s value can be increased by generating adequate profitability, acceptable cash flow management & sound control of working capital elements etc. Then it will be a choice for investment from a financial view point However, If the target company has substantial debt & if the company cannot resolve this burning issue, then investment may not be a sound idea. Also, If the target company does face prolonged labor problems, then again this company will not be a sound proposition for investment. But, If the target company has the right technology, human capital, other valuable assets etc, which can be exploited positively then the investment is value adding! If the company does not focus sufficiently on NFIs’ then, these requirements must be considered which is similar to a balance score card format.[Pl see next slide] Customer: encourages the identification of measures that answer the question "How do customers see us?" Examples: percent of sales from new products, on time delivery, share of important customers’ purchases, ranking by important customers. Internal business processes: encourages the identification of measures that answer the question "What must we excel at?" Examples: cycle time, unit cost, yield, new product introductions. Learning and growth: encourages the identification of measures that answer the question "How can we continue to improve, create value and innovate?". Examples: time to develop new generation of products, life cycle to product maturity, time to market versus competition b.)Problems, limitations and assumptions: State clearly any problems, limitations and assumptions that you need to make to answer the questions. c) ‘Limitations & assumptions’ to be considered. i. Research reports about the company with regard to their future strategic positions ii. Future movements in company values measured in terms of P/E ratio

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