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Great, thank you for your advice. I’ll include the group figures for those as suggested. Should I also do this for PBIT figures or using the PBIT for the commercial aircraft division is ok?
Hi Trephena,
I hope you are well and can assist me in clarifying few issues regarding ratio analysis.
1) ROCE – I’ve included commercial aircraft divisions PBIT which is provided in the segment reporting and the consolidated balance sheet figures for Capital employed (TA – CL). However, I feel this somewhat skews the figures and not a true ratio. Is this acceptable?
As the segement report also contains the total assets fig for commercial aircraft, would it be better to include this figure minus CL. CL fig for commercial aircraft would be taken as a % from the group CL fig. For e.g. aircraft divisions revenue makes up 70% of the total revenue. 70% of CL would be apportioned as aircraft divisions CL. Also, apply the same principle throughout other ratios where only consolidated figures are available.
Can you please advise?
2) For LT Debt figures, total non-current liabilities from the consolidated balance sheet has been used which includes provisions, deferred tax and income. Is this ok? or is better to try and extract the LT debt portion from these figures which can be quite tricky and complicated?
I am just aware that these my workings isn’t consistent enough to form a valid analysis. However, I’ve mentioned these issues on the paper and explained my workings.
Your advice would be greatly appreciated.
Thanks,
Nash@trephena – OBU have responded to my query mentioned in my earlier post.
Dear ….
Thank you for your email.
I appreciate that it may be difficult to find a company which completely meets the criteria. Some of the aerospace companies are also involved in defence. However, as long as the main activity of the company is manufacturing aircraft, that will be ok. Similarly, some food companies also produce beverages; as long as the principal activity is food production, they will be acceptable. Some students are choosing hotels/resorts which are also casinos. If the industry classification (not necessarily ICB), shows the company as ‘Hotels’, they will be acceptable.
Good luck with your work.
Yours sincerely
Shirley PowellACCA BSc (Hons) in Applied Accounting Office
Oxford Brookes Business School
Oxford Brookes University,
CLC130, Headington Campus,
Oxford OX3 0BP, UK@trephena – Thanks for your response. I’ve had no reply to my email yet, doubt I’d get one. If I do, I will post it here.
Hi,
Must say I’ve found this forum very helpful and thank you for your assistance and guidance.
I hope you can clarify a few things for me.
For my submission period, sectors are Aerospace, Food products & Hotels. I’ve looked at the ICB and looks like these are sub sectors of a sector. I’ve decided to choose Aerospace (2713).
My only concern is that organisations are now much more diverse and have different income source and can be involved in different sub sectors. So, how strict do we need to be in choosing a sector specific organisation? For. e.g. I’ve picked Rolls Royce PLC primarily sells aircraft engines but also supplies to defence sector (2717) and is involved with marine & nuclear activiites. Should I choose organsiatons that are strictly sector specific as provided by OBU? However this is going to be a challenge as we all know that the publicly available financial statements are group consolidated and segregating it will be a real challenge. Also, comparing it with its competitors will be a real challenge too as their figures will be diluted as well. Most of the organisations involved in aerospace sector will be involved in defence and other sectors for generating income. Not just aerospace, most of these organisations with publicly available financials will one way or another will have diverse income sources and a real challenge to be sub-sector specific.
I’ve emailed ACCA OBU to seek clarifications as well but no response yet.
Can you shed some light on this and assist?
Many thanks
Nash