a) Prepare financial ratios for Rolls Royce plc and Costainplc for 2010 &2011 which will enable the financial position and performance of the companies in 2011 to be measured. You are required to calculate the rations listed below. Use the attached abridged accounts for 2010 &2011 as the basis for your calculations. Show your calculations. Design your typeface font size and layout so that the ratios and the calculations can be set out on NO MORE than 3 pages of A4 for each company. The calculations should be shown in the appendix of your report.
b) This section of the report is to analyse and interpret the financial data. Use the ratios from section a) to analyse and make a judgment on the companies financial performance for the financial year 2011. I recommend that you subdivide this section into the five main groups of ratios. You should comment on why the ratios are what they are and how events in the year have influenced the financial outcomes. You should include graphs and charts showing trends. Compare performance on key ratios against industry averages or the performance of a key competitor. If you merely state that one ratio is bigger than another or that it has gone up or down from the previous year this will not secure you a pass at master's level. Your report for this section should not be longer than 2,000 words, excluding diagrams, tables, Appendices and your bibliography.
c) Prepare a summary of the key future prospects for one of the organisations for the year following these accounts. You should read the plans outlined in the annual reports and come to a judgment on whether you think they are realistic in the current economic climate and achievable in the context of their recent performance that you have analysed in sections a) and b). This should be prepared as a power point presentation of no more than12 slides, to be prepared and printed in note format with concise notes of what you will say to accompany each slide.
Ratios required.
• Gearing: Gearing
• Liquidity: Current, Acid Test
• Profitability: Return on Capital Employed, Gross Profit Margin, Net Profit Margin
• Efficiency: Inventory Turnover,Receivables (Debtor) days, Payables (Creditors) days, Asset Turnover
• Investment: Dividend yield, Price/earnings (P/E)
Use the Borrowings only in the Non-Current Liabilities sections of the accounts to calculate Capital Employed. You will need to research the market price per share.