Evaluating Thomas Cook’s Performance from Ratio Analysis: Annual Report 2015-2018

Task One

Using the Annual Report and Accounts of Thomas Cook for the period 2015, 2016, 2017 and 2018, you are required to evaluate the performance of the company. 

You are required to :

(a)Evaluate the performance of Thomas Cook in the following areas, using ratio analysis: 

-Profitability

-Liquidity/Solvency

-Working capital efficiency

-Long term financial structure

-Investors’ perspective

In addition you could also consider the performance of Thomas Cook in comparison with its peer group of competitors – for example, other travel agents in the industry.

You should summarise your findings and make particular reference to the interests of the different stakeholders of the company.

When undertaking any calculations use the ‘Total’ figures from the financial statements.

Note: Any accounting ratios for Thomas Cook must be calculated (and workings shown) and not extracted from external databases. (15% will be awarded with regard to the relevance and accuracy of the ratios and 25% will be rewarded according to the quality of your written analysis)

When completing Part (a) take the following into account:

1.4 years of analysis would be worthwhile.

2. Benchmarking to one competitor

3.Make sure that you explain why the ratios are changing and what the implications or conclusions of this are and tying this

4.Don't forget to comment on the views of specific stakeholders.

5.Contemplate your presentation. This work lends itself to the use of graphs, charts, tables and so on.

Considering your response to Task One and any further reading, you are required to provide advice, accompanied by a rationale, as to what you think could have been done – using appropriate ratios to support your answer, in order to save the company.

Your third task is to consider the business model that was employed by Thomas Cook.  What was the philosophy and why do you think that it failed?  Your arguments can also be supportive of some of the practices that they deployed if you think that they were worthy of merit but you must also consider the fundamental question of why the company did not survive.  Where possible, utilise the academic literature to support your arguments.

Further Information:

You are required to present well structured answers of no more than 2500 words (excluding calculations) in total.   The words should be allotted according to the percentage marks awarded for each task.

Learning Outcomes specifically assessed:

Subject Specific Knowledge and Skills

1.Identify and critically appraise the different components of a financial report, and assess the adequacy of current international financial reporting requirements for a greater understanding of company performance

2.Analyse and interpret financial data and information, evaluate their relevance and validity, and synthesise a range of information in the context of business situations

3.Demonstrate the ability to use conventional management accounting and financial management techniques to produce appropriate information for management to aid  planning, control and decision making

4.Evaluate the 

5.Critically appraise management accounting techniques with respect to their effectiveness and identify any weaknesses inherent in their use 

Non Subject Specific and Cognitive Skills 

1.Manage own learning, using the available range of resources, and ability to conduct research into business and management issues

2.Ability to collect relevant information relating to a given situation, analyse that information and synthesise it into an appropriate form in order to evaluate decision alternatives

3.Demonstrate a practical and integrative approach to a problem area or issue

4.Demonstrate rigour of academic arguments as well as the application of theory