Topic 8 Period 35 onwards

Hello,

I am doing RAP on Boeing vs Aribus. I am calculating Profitability Ratios with ROE in it,2 liquidity ratio e.g. Current and Quick and one Gearing ratio to assess Financial. is that good to go? and i am thinking to add 2 more indurtial like deliveries and orders?

Another question is that i am copying and paste the reference if i have to give a reference. Is that acceptable? or do have to change to wordings as well?

@accagunner -sorry I missed your earlier query (I have been on holiday) – yes pick out the main impact reasons -the importance of analysis is to summarise the significant as if you go into minute detail it will produce a tedious report. The reader needs to be focused towards the material and not lots of tiny details.

Regarding your second query – I do not recognise most of your abbreviations (note if I don’t understand them then a marker is also likely to struggle) so can’t advise until you explain their meaning in full.

Thanks @trephena for your reply.

Sorry i should have clarified they are key ratios/KPIs in hotel industry RevPAR=revenue per available room and ADR= average daily rate.

I’m facing another issue I’m confused regarding the cost reimbursement figure.

For hotels that Marriott manages for the owners, they reimburse marriott costs incurred these are shown in revenue and the same figure is shown as cost and deducted from the revenue to get operating income.

Even though this does affect operating income but it does affect operating margin ratio as the size of the numerator and denominator is changing.

So my question is should i analyze this figure as it makes 90% of the revenue and costs and for all three years and for Net profit and operating profit margin this would end up the reason.

I had decided that i would just mention it a little in reason for sales increase but ignore its impact on OP and NP ratios,but im worried that i might be wrong.

Best Regards.

@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 Powell

ACCA BSc (Hons) in Applied Accounting Office
Oxford Brookes Business School
Oxford Brookes University,
CLC130, Headington Campus,
Oxford OX3 0BP, UK

Should i also add graphs and chart in excel sheet of Appendices? For example increase in revenues has to be shown in graph or chart. In word when i insert a chart it open another new excel sheet to change or edit the data and change name of series 1 , Series 2. But Do i have to show this in excel as well? or in the word document its ok?

Also Boeing and Airbus are Aircraft manufacturing. They also manufacture Helicopters and space shuttle. So Are they acceptable. I will be commenting on all of their segment revenue.

hello Trephena,

Kindly guide me whether a specific point could be used in two models e.g shown as a threat in the SWOT analysis and as a threat to entry in Porter’s five forces.

Kindly reply a soon as possible

@dhillon – whether you choose consolidated or financial statements at a company level you have to be consistent for both main company and comparator. Often it may be possible to do do some segmental analysis with sales etc. as you suggest.

As I have tried to impress upon students: it is important to do a good business analysis and link the factors from this to the financial analysis. Too often there is too much fixation with calculations whereas the direction and strategic focus of the company lies behind most of what has actually driven financial performance (this is particularly so with the aerospace companies ).

@trephena So should I talk about how both the companies have responded to environmental change under PEST and SWOT or just my main company?

Hi,

I have decided to do Topic 8 for the submission period 36. I will be using a company from the Hotel industry Marriott Hotels with a comparator Hilton Hotels, seems reasonable to me as both of these are the closeted rivals to each other, not sure whether I should use industry performance as well though.
My approach i think will be starting with the business valuation assessing the external factors, the competitiveness in the market, portfolio analysis, value creation for competiveness and then summarise all this in a SWOT.
Then for the financial valuation i will use year on year performance and ration analysis (not sure if i can perform a stock valuation if that is also required)
One last think i am concerned with is the timing period for which i need to do the valuation. The information pack says (i need to use the most resent three years financial statements available at the start of the submission period) so if i am submitting in May-18 do i need to use the financial statements from 2017 as i can see that Marriott Hotels will publish the annual accounts for 2017 in March-18.

Hi Trephena,
I really need your help.
I’ve been able to squeeze only 9 ratios , 6 financial and 3 hotel related, but now I’m worried that my ratios are few in “quantity”, and im thinking whether to merge my 3 hotel ratios into one and do another financial ratio but then I’d have total of 8 ratios only. Is having few ratios in quantity a negative?
Kindly help me.
Best Regards

I am planning to take the hotel industry. Either Hilton vs marriot or Marriot vs hyatt. Any suggestion. I have not found enough resources yet except the annual reports.

I know that our recommended mentors at the Learning Luminarium advise against using companies that operate under different reporting standards. However I can’t help feeling as this further restricts choice for the current industry sectors that OBU itself will not discourage it provided it is approached appropriately.

Obviously it is a serious limitation of the data when making comparisons however this is only part of the analysis and good application of the models in these circumstances is even more important.

So you would need to state this problem as a serious limitation but ensure that you really do try to get behind the ratios to understand what has affected the trends (i.e. the factors from the business analysis and models, strategic decisions) rather than just relying on ratios. Also restate any limitations in any particular figures you have presented if the treatment from reporting rules may have influenced the outcome so that you do your best to present a ‘level playing field’.

Yes the Information Pack does say with regard to financial statements the latest 3 years. It also tells you that you are not expected to include any financial statements that have been published within 90 days of the submission period opening i. e. before 1 Feb 2018 for P36.

If however you wish to include the statements published in March 2018 then you may do so but there is no compulsion.