Ok so I am doing my RAP T8 on GlaxoSmithKline, a pharmaceutical company. I have a list of Qs that I need to clarify.
1. Can a single reference be used twice in RAP?
2. If not, how it should be referred to. For e.g: my findings in SWOT relate to financial analysis (ratios), how and where should I link them together, within SWOT or in financial analysis individual ratio?
3. Does the commentary of ratios be equally given importance when using a comparator?
4. I have mentioned in section 2 that I will be conducting Financial analysis with both ratio analysis and horizontal analysis. What is the best approach to do this given the word count limit?
5. I read somewhere that its a good way to include limitations of business models used at end of discussion of business analysis relating to the case (not general cons/drawbacks of the model). Any tips?
6. Some of my ratios are slightly different from those mentioned in annual reports. I have referred to notes, restated financials but nothing seems to narrow down the gaps. Should I continue with it or is it suppose to be accurate as Annual Reports?
(Differences are with: Debtor days, Payable days, Inventory days & turnover, Fixed asset turnover)
7. Also, I have mostly read here that SWOT works best with PESTEL or PEST, my mentor suggest Porter's 5 forces. Although a lot of material I already mentioned in SWOT can be used in PEST. Whereas I am not getting many ideas on Porter's. But at the same point I do not want to be repeating my words I used in SWOT. Any tips?
I will be adding Qs as I progress with my RAP.
Thanking in advance for your comments on this thread.
Other Accountancy Qualifications
General Queries Topic 8
Unfortunately I am unaware of any quick method of achieving this. Someone has suggested one answer on the Referencing forum topic thread. What might work if it was done from the beginning is to copy each entry into Excel and use sort but could still be a bit time consuming and I would still be inclined to just cut and paste the Word doc.
(I would ask that questions are posted on the relevant thread by everyone -as this one relates to all topics not just Topic 8 this current thread is not the best place for it)
Hi @ehsan, @ mentors, and OT forum,
Please can you suggest if my choice of using EBIT- adjusted for calculating Operating Margin is correct? Would that be incorrect ? I am doing this avoid factoring in the “One Off changes” that may effect the overall performance of my airframe companies ? Will the marker object over EBIT versus EBIT adjusted ?
Thank you for the help.
The whole point is whether the difference between the two figures is significant and why it has been adjusted.
Markers will want you to get behind the figures. Mostly they want you to look at the management strategies (that is how strategic decisions taken by the board) have influenced performance.
You need to focus on good application of the models identifying strengths (in particular for example, specific products) and market opportunities. One thing if you have chosen Boeing is that there has been a significant repurchase of shares. When looking at liquidity, gearing and shareholder returns this will have played a big role in changes to these ratios and so you should evaluate the effectiveness of this decision all round. This is the type of approach needed.
When it comes to analysis don't just throw figures at the marker, explain. So the answer to your question indirectly Is: is this 'one-off change' really important or not? (is it for example a change in depreciation methods -something that does not affect revenue, market position or liquidity at all?) Do not go on in your report about things the marker can see from the graphs or reading the notes to the accounts for themselves. If the adjusted figure is just an audit 'thing' then it is not of particular significance so focus on factors that are important.
Hi,
I am having difficulties choosing the companies for comparator. Can you advise me if it would be a good comparison if I compare a company with for example revenue of $100 million with a company of revenue $40 million?
Thank you for the help.
This shouldn't be a problem if you state this fact in your limitations and any implications affecting the comparisons
Hi, i need help!! can i choose Kelogg's Company or Almarai Company for topic 8 for period 36?
@trephena i am due to appear for the OBU BSc, i am facing a small problem. The company i have chosen under the food products category, is a private entity for which i can get the required data for topic 8. This company only exports.
The problem is that its competitor is a listed entity with operations in local market as well as exports. Now i do not believe them to be on the same level. The listed competitor is huge in every aspect.
Can i use that competitor to compare my chosen private entity with? Furthermore, there are no other competitors in the market that are listed so i cant get their data. The competitor chosen is the only listed entity that has published financials and its export process has a similar business model as the private entity which i will use. Moreover, it does hold a significant marketshare.
This will depend mainly on whether your company's financial statements are available and in English. If the answer to either of these is no then you will need to choose a different company. You can account for the differences in their size, legal status and markets by referring to these in the limitations. (By the way you say you can get the financials but there will need to be some independent evidence that the company exists i.e. the accounts are publically available AND/OR there is a professional company website).
Hi, getting stuck into my topic 8 based RAP project. I'm doing a lot of reading before I get stuck into writing the RAP. My issue is trying to find some good quality reading material in regards to 'Strategy planning & analysis' and 'Business and financial ratio analysis'. Obviously, I've got my ACCA textbooks but really wanted to add some meat to my analysis and insights/discussion. The offerings from the internet seem sporadic in quality. Is there a recommended reading list or any quality texts/authors I should be looking out for?
Thank you very much in advance
Bilbo
Hi Kernowkid
For Strategy readings, we suggest going straight to the original authors, where possible. For example, why quote from other sources on Porter's 5 Forces, when the student should be reading Porter himself?
As for ratio analysis, you could just search for a reputable source that could come from consultancies (like McKinsey or Deloitte), banks or universities.
All said, we do hope you have selected a well-known company such that there is an abundance of information on it's business. Some lesser known companies have very little public information, making it difficult to conduct analysis such as a SWOT.
It is better to look beyond your ACCA textbooks as over-reliance on the ACCA textbooks may signal to the examiner that the student is not comfortable and familiar with research skills.
All the best,
Irwin
The Learning Luminarium
@chebirr said: hi how many comparators are students allow to use aside the main casestudy chosen?I suggest you to use one competitor/Industry Average due to word limit. you may face word limitation in case of selecting more than one competitor. Let me know if you have any further question. Regards,
Hi Nhongo,
1) different year ends are fine. Just recognize it as a limitation of your report.
2) The information pack discusses whether you should use the annual reports and when is the cut off date that OBU uses (ie after this date, you can ignore the annual report releases)
Best,
Irwin
The Learning Luminarium
Hi there,
My comparator company has released financial statements for 31/12/17, but my focus company's last set of accounts is 31/03/17. Am I going to be penalised for using 2014, 2015 and 2016 accounts for my comparator and ignoring the 2017 accounts?
Hi Scarlet,
No, use the focus company’s most recent set of audited annual accounts (31/03/17) and you will be fine. They will not penalize you for ignoring 2017.
All the best,
Irwin
The Learning Luminarium
Hi,
Many thanks Irwin for your above reply, I have noted your suggestions.
Another ratio related question...
Should I spend a lot of time trying to replicate the ratios quoted in the Annual Returns of my focus company. In some cases the information necessary to replicate the calculations are not available in all of the years. Should I just focus on what I decide to incorporate into my own calculations and the arguments for/against their inclusion/exclusion?
Many thanks in advance
Will
8y ago#166have an issue I need clarification on and will really appreciate help.
I am doing topic 19 .i plan to do a pre and post merger financial analysis (ratio/trend) of the acquiring company. The merger I'm basing the RAP on happened early to mid 2015 so my premerger years are 2012,2013 and 2014. In June 2013 the acquiring company was itself acquired and the new owners changed its year end from April 30 to dec 31 the consolidated p&l therefore includes a full year 2012 result (ending 28 April 2013), 9 months results known as the transition period(29th April-31 dec 2013) and full year 2014(Jan-dec 2014)
However in the annual report , to assess performance the p&l was restated covering two periods.
The first one compares 2013 and 14 performance and the p&l was prepared for the 12 months period to 31 dec 2013/14(52 weeks )
The second compares 2013 and 2012 the p&l was prepared for the period April to dec 2012/13(34 weeks).
My question now is how to compare like for like ( with different period lengths 52 wks vs 34 wks) and also how do I establish the trend for three years
Is it ok if I show trend for each of the two periods separately and do my analysis separately as the company has done?I mean for eg do one (sales growth)graph showing 2013 vs 2014 and another showing 2013 vs 2012 and do my analysis for each based on the periods ?
I don’t know if I make sense but I can send you the financials through email if you don’t mind looking at it so that you can understand what I’m trying to say if this post is not too clear.
Hi Imaan
Yes, this is a sticky situation indeed. OBU does not give a specific instruction on this and expects students to try to figure the best way forward.
There are a few possibilities
1) Just keep the periods as given by the annual reports and state clearly that it is a limitation. You should explore and explain how strong this limitation is though. Will the 9 months period be badly affected by seasonal effects (e.g. missing out the high-sales season?) Since we work on ratios, it could jolly well be that the time periods do not affect the ratios too much. (except sales growth ratio and it's kind)
2) You could re-construct the financial report so that each year has 12 months. This would require using the quarterly reports though.
In conclusion, I wouldn't wish to be excessively stressed over this because for topic 19, a large part of your analysis will be dedicated to the POST-MERGER. The pre-merger years are just to set the scene and have a benchmark on what the merger was to improve/accomplish.
All the best,
Irwin
The Learning Luminarium
Hi Will,
This is a straightforward question - OBU expects students to generate their own ratios. Getting ratios from annual reports or platforms like Bloomberg is severely frowned upon as it gives no evidence that students are competent in calculating ratios.
Hope this helps!
Irwin
The Learning Luminarium
Hi @trephena and the OT mentors,
I am very close to summarizing my financial analysis but I need some help on my Ratios. I have calculated and thoroughly analysed the following ratios for Airbus :
1 - Sales Ratio ( analysed the sales/orders/deliveries )
2 - For Profitability : Operating Profit Margin Ratio
3 - For Liquidity : Current Ratio
4 - Debt-to-Equity Ratio
5 - Dividend Payout Ratio
I know there are more common ratios that I am not calculating such as :
P/E Ratio, Return on Equity , ROE , ROCE .
Please can you guide me if my ratio are sufficient ? Am i missing something ? Will they object that I didnt cover something. please can you help on this.
Thanks so much @trephena,
Hi @trephena and the OT mentors,
I am very close to summarizing my financial analysis but I need some help on my Ratios. I have calculated and thoroughly analysed the following ratios for Airbus :
1 – Sales Ratio ( analysed the sales/orders/deliveries )
2 – For Profitability : Operating Profit Margin Ratio
3 – For Liquidity : Current Ratio
4 – Debt-to-Equity Ratio
5 – Dividend Payout Ratio
I know there are more common ratios that I am not calculating such as :
P/E Ratio, Return on Equity , ROE , ROCE .
Please can you guide me if my ratio are sufficient ? Am i missing something ? Will they object that I didnt cover something.@LearningLuminarium please can you help on this.
Thanks so much @trephena,
Hi Irwin,
Many thanks for the reply.
However I fear I may have been unclear in the wording of my question.
After calculating any ratios that are also included in the annual reports, to what degree will I be expected to know the differences between the two. If I have calculated Roce at 3% and the annual reports states it as 5.5%, how detailed should my explanation be of the difference? Is it acceptable to ignore the difference (though this seems obviously wrong to me to do) and use my ratios? Or is it sufficient to merely quote the description of the calculation in the annual reports and then state that the numbers are not provided in enough detail in order to replicate them?
Many thanks in advance,
Regards
Will
Hi. I've searched on prior forums but I could not get any info.
What is the minimum number of ratios that are needed and which ones are essential?
Kind regards
Akani
8y ago#173Thank you very much for getting back to me.
Option 1 seems more straightforward and easier to achieve however I have a few further questions.
I forgot to mention that I could use the 2013 annual report which was prepared for a full 52 weeks ending 30 April 2013/12.This will enable me to compare full year results for both periods .However this was prepared under a different basis of accounting from the 2014 financials(which used purchase accounting) but I could explain this as a limitation.
About the ratios , you seem to think they wont be affected by the period lengths however when I calculated asset turnover for 2012-2013 using sales of 34 weeks(restated 2014 report) and sales of 52 weeks( 2013 report) I got significantly different results.
Finally in your last post you mentioned that the premerger financial analysis should only set the scene. Does this mean I shouldn't do all the ratios for the premerger or they shouldn't be too detailed? What ratios do you suggest I do for this topic.
Thank you very much for all the help you give to people like me.
Hi,
Just wanted to know if harvard style referencing extending to citing the appendices? Is there a standardised way to reference/label my own graphs and tables in the appendices from the main text? Specifically, labeling appendix does it have to be appx 1 2 3 or appx A B C or can I just label however I wish (like 1a 1b 1c) and will it be frowned upon if the appendix is not completely consecutive and/or missing numbers/letters in the sequence.
Thanks for all your help,
Will
Provided you have done and used some of your own calculations it is fine to go with your suggestion "is it sufficient to merely quote the description of the calculation in the annual reports and then state that the numbers are not provided in enough detail in order to replicate them?".
State the issues you have found in your limitations and where you discuss the particular ratio concerned
That's because there is NO prescribed number of ratios.
With Topix 8 it is a matter of doing a good business analysis and demonstrating adequate use of appropriate ratios in the financial analysis. Normally GP, NP/ operating profit, and relevant ratios on liquidity, gearing and several investor ratios + KPIs.
Linkage between the factors from the models in the discussions of the ratios I.e. how strengths and specific aspects from the PESTLE have influenced management decisions and impacted on performance and financial results is what is required for a pass grade
Just refer the reader to the appropriate appendix ( Appendix 5)
The important consideration with labelling is whether someone can follow your work. Probably a number followed by title is most clear in this regard e.g. 1. Balance Sheet XYZ; 4. Income Stmt ABC. You.might co.sided having the ratio calculations on a separate tab e.g. 5. Ratios XYZ
Thank you
Hi Trephena et al,
Many thanks, for this and the continued support from all at OT, I would be truly lost without your constant input!
Hello Trephena, would it be advisable to use only one model in the external analysis part?
The structure of my report I'm picturing is:
1. PESTEL analysis
2. Ratio analysis
3. SW in "SWOT" and TOWS matrix
4. Recommendation
5. Conclusion
I find that PESTEL is already sufficient to cover every threats and opportunities and so to use SW and TOWS after my ratio analysis, I could avoid repeating what I have covered in PESTEL and also explain the strengths and weaknesses better through the "events" mentioned in the ratio analysis part. It would also blend well with the recommendation part that comes next.
But is this recommended? I could use a different model such as five forces but there's already so much to write under PESTEL and I may end up with two unelaborated models.
Looking forward to your reply, thanks :)
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