Account final assignment calculations.docx - MSc in...

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MSc in International Business and Management Accounting for Managers Table of Contents Task 1: Distil Plc. Preformation Evaluation based on Various Categories of Ratios .............. 4 1. Profitability Ratio .......................................................................................................... 4 1.1 ROCE ........................................................................................................................ 4 1.2 Gross Profit Margin ................................................................................................... 5 1.3 Operating Profit Margin ............................................................................................ 6 1.4 Return on Equity ........................................................................................................ 6 2. Liquidity Ratio ............................................................................................................... 7 1
2.1 Working Capital ......................................................................................................... 7 2.2 Acid Test Ratio ........................................................................................................... 7 3. Efficiency Ratio ............................................................................................................ 8 3.1 Average stock holding period .................................................................................... 8 3.2 Debtor collection period ............................................................................................ 9 3.3 Number of days company takes to pay Creditor ..................................................... 10 4. Financial Structure ..................................................................................................... 11 4.1 Gearing Ratio .......................................................................................................... 11 5. Investor’s Ratio .......................................................................................................... 11 5.1 Earning per share (EPS) ......................................................................................... 12 5.2 Dividend Yield .......................................................................................................... 12 5.3 Dividend Payout Ratio ............................................................................................. 13 5.4 Price Earning/ PE Ratio .......................................................................................... 13 Task 2- Recommendation to Improve the Ratios of Distil Plc .............................................. 14 Task 3: Analyzing the four sections of the Chairman’s Statement ....................................... 15 Task 4: Analyzing impact of Principle Risks and Uncertainties on Ratios ........................... 15 Task 5: Analyzing the importance of Ratios to stakeholders ............................................... 16 Appendix 1 ........................................................................................................................... 17 Bibliography ......................................................................................................................... 28 2
Distil UK Distil Plc is a London based an alcohol manufacturer that produces Spiced Rum, Blackwood’s Vintage Gin, Blackwood’s Vodka, Jogo’s Vanilla Cream Liqueur and so on (Distil Plc, n.d.). It has its presence in various international markets. The company has well positioned its brand and continue to spend considerable resources ensuring that its intellectual property are registered and protected in the countries where it operates (Distil Plc, n.d.). 3
As a financial analyst in Distl Plc, I would analyze the annual report and draw some recommendations based on the company’s financial performance. Below is provided the analysis based on the company’s Annual report for the period 2018, 2019 and 2020. Task 1: Distil Plc. Preformation Evaluation based on Various Categories of Ratios 1. Profitability Ratio 1.1 ROCE 2018 2019 2020 4.80% 4.90% 5.00% 5.10% 5.20% 5.30% 5.40% 5.21% 5.04% 5.36% ROCE Year Percentage Return on capital employed (ROCE) is a ratio that shows the efficiency of capital employed in a company (Jones, 2013,p.253). The percentage of ROCE above indicates the returns on three different year that Distil Plc earns on its capital. It is noticed from the graph above that ROCE in 2019 is reduced than two other years. It means that Distil Plc return was slightly decreased in 2019 compared to two other years. The fall in ROCE might have been to due higher cost of goods sold or due to low sales volume of Distil plc. 4
1.2 Gross Profit Margin 2018 2019 2020 57.50% 58.00% 58.50% 59.00% 59.50% 60.00% 58.19% 59.52% 59.24% Gross Profit Margin Year Percentage It is the profit occurred before overheads and any other expenses. In the figure above, gross profit margin of Distil Plc is higher in 2019 which slightly decreased in 2020. It shows that the direct return Distil Plc earned from selling its product after reducing COGS is comparatively higher in 2019. The fall in gross profit margin might be due to increased cost of goods sold or lower selling price [ CITATION Chr19 \l 1033 ].

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