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@avian will When it comes to T8 I am not a great fan of Porter’s 5 Fs as I think it is of limited use in this particular context. You are far better off doing a SWOT and PESTLE well than attempting 3 models and doing them superficially.
Remember you need to link your business and financial analyses when doing your evaluation. This means that you should reflect on how the PESTLE factors impact on the company’s performance and decisions and how the management strategies build on the company’s strengths and how they try to overcome weaknesses (like the example of Laura Ashley I gave in my article on Evaluation). So don’t fret about Porter’s – it is not mandatory to include it. 🙂
Great! Thanks @trephena… much appreciate it 🙂
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hi
which company u r doing?- Topics: 0
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which company you are doing?
Hello,
When performing my ratio analysis on my selected organization, I know I am to investigate what factors have caused the ratios to change from year to year. My question is am i also suppose to investigate what factors caused the ratios of my comparator company to change from year to year or am I only to do it for my selected organization. Your response will be kindly appreciated.You need to provide reasons for movements in ratios (internal as well as externals) of both companies as you need to compare financial performance of your main company with opponent company.
I am preparing my ratio table for the two companies on excel. On this I have two separate sheet tabs for the companies. I have included extracts from SOFP and SOCI and then used excel formulae to generate ratios. Both the companies are very much comparable. They are both prepared on similar basis. Few queries I have in regards to this.
1) since I have used excel formulae do I still have to separately show ratio formulae, next to the ratios in words, eg.(Current ratio = C.A/C.L?)
2) most of the ratios that I calculated do match but some of the ratios are close but not exactly the same as published on the annual reports/other sources. Strangely some of the ratios on the annual reports don’t even match the ratios calculated by other reliable sources, eg.Stock exchange websites. I am really confused because I don’t know which number is right?
In the exams we were if we were asked to calculate current ratio, we would divide C.A by C.L. Here if I pick up those figures from the financial statements and apply the same formula , the numbers don’t match because SOFP and SOCI both have notes along. When I follow the notes, 10-12 more numbers come into play which I have no clue about. I don’t know if I should add or substract from the figures on financial statements.
Please help, I am going absolutely cuckoo.
Hi there, while trephena is away I will try to answer your queries, and if there is any problem she will add up.
1. yes make a separate sheet to display ratio formulas, there is copy paste option in excel which you may use to copy and paste formulas. Prove you IT skills with bang bang.
2. Don’t worry about minor differences in calculations,you have to prove your calculations not others, your formula and calculations should be correct. Other sources use their own formulas and figures. Mind you, you are doing your own research and not copying others.
3. companies restate previous years statements after taking into account post balance sheet events.
Good LuckHey,
Thanks for your reply. I have another couple queries
1) To calculate ratios like P/E ratio, I need EPS and market value of shares. The EPS can be found on annual reports but the market value of shares are not given. P/E ratio itself can be found in the annual reports of the company. Can I simply take the ratio from the annual report and use in my ratio table? If i do this , I am not calculating but simply stating with reference to the annual reports. Is that acceptable?
2) how do I reference the ratio table on the spreadsheet? I would have to reference all the relevant annual reports from the last three years relating to both the companies. Along with them I would reference a couple more website database. Do I put citations in a cell? How should I reference the table?
hello, I too am doing topic 8 for November 2014 submission and have a few doubts myself id like to clarify with @trephena . I just recently found the OBU forums here and am I excited to read around more.
my two companies are from the beverage industry and their year end is December 31. so I have taken 3 years as (2011, 2012, 2013) so here are my doubts.
-it is acceptable for me to take latest as 2013 and not 2014? as im assuming because year end is 31 December, my latest is 2013?
-my mentor asked me to take four years while calculating ratios so I discuss the variances of ratios as (2010-2011) (2011-2012) (2012-2013) in my RAP. is that accurate? I was afraid that I will get penalized for using four years instead of three. in my graphs however I have been asked to use 3 years figures. so I am a bit confused
-in part 1 of the RAP, what is the difference between objectives and research question? because under that I have just written for example; to perform financial analysis through ratios for company xx and compare it with company xx etc
-where and how do I include segmental revenue figures and industry averages?thanks in advance x
1. There is no problem in using the company’s own ratios provided they are referenced accordingly
2. Why not use footnotes to reference your tables? If you go into the Insert tab on Ms Word it will do it for you or look up how to do it first if you are unsure about what to do and want to practise first
@pallavirai You are required to use the latest FSs. So yours are the 3 years ended 31st Dec 2013 for P29 according to the info you have given and therefore the 3 years you look at are 1st Jan 2011 to 31st Dec 2013.
Please read my article on Evaluation on our homepage
http://www.opentuition.com/obuas far too many students fail E&A. This is because they fixate on number crunching and do not EXPLAIN the real factors that underlie the trends. I suggest you read the CEO / Directors reports and get ‘a feel’ for the company before you set about any analysis. If you read through the earlier pages of the annual report you may find some segmental information and other useful info possibly including relevant KPIs. You are advised to choose a comparator rather just industry averages as markers seem to expect some detailed analysis (not just comments that one is better than the other and by how much)
Please use our site search facility to find posts about objectives and research questions as these have been dealt with before elsewhere
Hi,
Hope you can help on the below please.
When doing the business models, e.g SWOT… do I just refer to the last year of the analysis as I believe this is an snapshot in time or do I have to mention what has happened in the past 3 years (analysis period)? Many thanks
Amarain@Amarain – it isn’t quite so clear cut as strengths & weaknesses tend be something that build up over time although the opportunities & threats usually are more recent factors. PESTLE factors can be both too but usually have at least a medium to long-term impact.
The important thing to remember is to bring in the factors wherever you can in your financial analysis. For example you may be able to show that increases in online sales are related to more apps on smart phones (but you would require a reference to support this statement) as a technological factor and if you see my article on Evaluation on our homepage you will see that I mentioned in connection with Laura Ashley strengths and weaknesses that covered more than one year.
The approach to take for this is to read all the CEO & Directors reports for all the years as these will help you discover what is significant
@trephena thankyour for your reply, you’ve cleared my doubts 🙂
im new to the whole forum system and my notification went into junk mail, so I didn’t realize you replied, therefore created a new forum asking the same question. sorry!
now im struggling to find the forum to delete it as the questions are the same! *technologically challenged*
@pallavirai – no worries – I’ve probably removed the duplicate anyway 🙂
It’s just I answer a question in one place then another student asks a similar question in another place so I end up repeating the answer and then the answers are all over the place and nobody can find anything so it all becomes a self-perpetuating muddle 😀
@trephena i totally understand. (y)
@trephena im doing my RAP on Coca-Cola Company (Global) and comapartor company PepsiCo.(Global)
so id like to know if your comment above saying that PESTLE analysis is better than Porters is for topic 8 or for @avianwill’s industry/company, as it is telecom so being technological, Pestle covers that area. if so, would PESTLE still be a more appropriate choice compared to porters in my case as well?
and is it true that Porters has to be performed on a SBU and cant be performed on the company as a whole, like in my instance KO?
do let me know what you think 🙂
@pallavirai – as I have stated above and probably elsewhere I am just not convinced that Potter’s 5Fs is particularly useful for T8 as it cannot really help that much in linking the business & financial analyses. If students want to use it then it’s up to them. However as markers are increasingly looking for deeper explanations of the financial performance and have criticised students for not tying in their models to the financial analysis I recommend focusing on SWOT & PESTLE as models 🙂
(Take a look at my article on Evaluation http://www.opentuition.com/obu )
Hi Trephena,
hope you can help please. In Part 2, when explaining the ratios can I cite the same book e.g BPP as reference or should I use several books? In essence all books would say the say regarding what the ratios means but on the other hand having let’s say 10-12 ratios explained with the BPP next to it…does it look good? Many thanksKind Regards
AmarainPS: Sorry not sure if I’ve posted this in the right topic
Dear Amarain,
You can use BPP as reference book or you can use other books and websites to explain Ratio Analyis. You need to explain “Ratio Analysis” in general along with some major categories of ratios (e.g. Profitability Ratios, liquidity ratios, Working capital ratios,etc.).
Moreover you also need to explain advantages and limitations of Ratio analysis.
Thanks.
PS: 100% copy paste from web/book (even you provide reference) is not allowed.
alright thankyou @trephena. As you Suggested,I have done SWOT and PESTLE analysis, but considering word count restrictions, would it be okay to stick to PEST instead of PESTLE, I do feel I have strong points for the four factors (PEST)?
for environmental analysis, I haven’t found much info on significant factors.
for legal, I did see bans being placed on junk food, namely, NY soda ban and mexico taxing junk food and beverages. but couldn’t that be placed under political?
regards
@pallavirai -yes fine to do PEST. Yes probably difficult to find things for environment but you could possibly look at their CSR and see if there is anything relevant – being ‘greener’, encouraging recycling of cans and bottles, reducing carbon footprint by using local facilities manufacturing under license. The soda ban and junk food tax can be used as part of the legal and/or social factors as they are a consequence of both.
To trim word count look at parts I & II as usually it’s best to cut there than in findings and analysis, make sure you have adequate graphs then you don’t have yo go into much detail about changes in trends as the reader can see them and then you don’t over do figures – just concentrate on mentioning the important ones
@trephena. thankyou for clearing my doubts. will go over part one and two to cut down on word count. that’s a good idea.
I do understand that there needs to be a link between business analysis and financial analysis but I want to ensure Im not wasting words by repeating the same thing again.
so for example, when im doing horizontal analysis of sales/revenue growth over the years of the company under financial analysis, I feel as though a lot of points I talked about in SWOT and PEST would apply here. so do I just say something along the lines of “as mentioned in SWOT/PEST this factor would affect the revenue” im not exactly sure on how to bring the points in without repeating myself.
on a slight tangent, i did read the OT article on evaluation and analysis of part 3 but im still a little confused towards the depth of analysis i would need to go into in say for example, ratio analysis due to word count restrictions.
what I’ve been doing for each ratio is to make a graph showing the trends and increases/decreases for the 3 years of the company and its comparator and talking about the reasons for the increase/decrease of the company over 3 years and then how the company has fared up against the comparator.
is that enough or do i need to go into more detail than that and talk about how the reasons came out to be etc?
kind regards
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