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Analysis and evaluation
Often Raps are failed for “insufficient analysis and evaluation.” I am sorry but this only refers to topic 8.
What is analysis: GP margin increased by x% YoY basis.
Evaluation: The formula of GP Margin=gross profit/sales
formula for gross profit= Sales less cost of sales.
Variables involved: Sales and cost of sales.
Go to notes to accounts, you will find all elements of sales and cost of sales and you will discover the reason for changes. its good idea to make a spread sheet and populate all data and insert formula of % change YoY. Automatically spread sheet will give you % changes in elements YoY and you will find the significant figures to comment on.
Take care and good luck. (deadline fast approaching).
Tip for every day: Prayers do work (:Evaluation though also means looking at what has driven the changes. In my experience the Topic 8 RAPs that fail on Evaluation, Analysis & Conclusions (and I have seen loads of them in my time!), have relied too much on one or more of the following WRONG approaches:
1. They are ‘heavy’ on figures in the text – calculating lots of ratios and movements in the trends and very little else – (calculating a ratio is not analysis it is just the FIRST step in the process and if they used a graph the reader would see the trend far more readily than being made to read loads of figures anyway!)
2 the changes in the trends are ‘explained’ in terms of other items in the accounts e.g. the operating profit has decreased because administration costs and depreciation have gone up – (something anyone could see for themselves if they just looked at the income statement).
3. They make vague statements ‘this might be because of…’ ; ‘this could be due to…’ ( the point of research is to find out WHY. If the student bothered to read the CEO/ directors reports & statements they might start to find out what has really gone on in the company in terms of ACTUAL facts, policies & strategies)
4. They don’t bring in external sources (you really shouldn’t rely absolutely on just the annual reports, they are assembled to show how well the directors [ those guys + the token woman at the top] have performed [they have to justify all those fat salaries and bonuses after all!], so the directors will emphasise the good and play down the bad. Maybe these guys and the doll have really done well but you will only find that out if you READ & RESEARCH more widely – the business press, trade journals, analyst reports etc that will independently confirm and comment on the company’s performance).The advantage of incorporating point 4. is that you will be producing a BALANCED report – a sign of GOOD evaluation, have evidence of GOOD information gathering and be well on the way to not just passing but getting a B or even an A grade…. (and if you take the wrong approaches outlined above then more than likely you will find instead that you get an F for Evaluation and an F for Information Gathering)
Yes @trephena has completed the thing I missed. Always give references from sources other than company which supports your analysis and evaluation. To only depend on company will be one sided.
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