Choosing a company /topic- Where to start??

@kamran007 – you are not restricted to a particular company in your own country under the current rules. However choice of company for T8 should always be made on the availability of data, suitable comparator, access to business articles on the two and reliable current information.

NOTE Students are reminded of the Forum rules and Guidelines: Queries should be posted under an existing appropriate topic rather than opening a new topic each time. So please look at the last few pages of topics and/or use the search facility to look for the most suitable home for your query and only if none exists, then start a new topic. Thanks Trephena

This question belongs either under ‘Queries Topic 8’ or ‘Choosing a company – where to start??’ (for T8 general queries) and wll be moved to the latter shortly

I have the same question. I work as a Finance Manager in a school and Children centre. I was going to use to Automobile companies in Pakistan to base my project on but it makes more sense to base it on an envirmoment I am currently working in. Or would one of the other topics be more appropriate for a not for profit organisation?

Hi

Thanks for your comments trephena (Topic 9)

What about topic 5 Islamic instruments is it possible with secondary data only because most probably the organization will be a bank of financial institution getting primary data will be almost impossible.

I have interest in ERP systems and Islamic Finance but both are difficult topics as far as availability of data is concerned.

@trephena – Hi Trephena. I have a keen interest in football so was thinking for my Topic 8 RAP, I could do it on a football team and another team in the same league/country could be my comparator. Would you advise to use teams that are PLC status or would I be able to gather enough research for LTD teams in your opinion?

Does a company that you are doing a comparison with have to be listed too? For topic 18?

The biggest competitor is not listed. It’s in retail – similar company to boots in the UK.

The company I will be doing research on is listed.

If a company I am comparing to is it ok, to use a company like M&S to compare boots?

There are some products that cross. And it is retail to retail.

PLEASE HELP

Can i choose to do a project on a local bank? Like it’s not of that small scale, it operates in the whole country, Banks do attract me and i know someone close working in there so i could get a lot of junks about reports and stuff? Do you think it is suitable ?

Hi,
I wondered if someone could give me some advice/guidance please?
I am looking to start my RAP and have chosen topic 8.
I would like to compare two football clubs as I am a keen football supporter.
I would like to compare Liverpool with Tottenham however Liverpool is a limited company and a wholly owned subsidiary and Tottenham is a public company. Would there be any reason to not compare these two teams for my project?

Thanks
Katie

@Katie – It all depends on whether you can get all the relevant information made available to you for the both the clubs.
I would be asking these questions before proceeding:

1.How do I plan on obtaining the financial statements for the Liverpool FC?
2.Will I be able to compare a PLC Vs a Ltd company or do I compare the PLC vs the Group.
3.Are they worth comparing by looking at their lines of businesses and interests apart from the obvious.

It would also be worth keeping an eye on the effect of their performances in the Premier League, their participation in UEFA cups and the effect of participation on their finances and mentioning it in your report.

Hi Mehran – I have reproduced the lot below as if football clubs start to become a ‘normal’ subject company for T8 then anyone interested can share the benefit of the advice. Here are extracts from my emails to Liam. I am not sure if he ever submitted or whether he passed as he has not been active on the OT forum for several months.

The first bit is about choosing a suitable mentor:
(Liam had mentioned choosing a mentor to me and these comments were made several months ago and I stress are not to be taken personally by you or any other mentor. I just wanted to emphasise that [a] he needed one that appreciated it was his RAP so his choice of company {something I personally feel very strongly about, which is obvious from my comments!} and [b] perhaps he needed a specific mentor who shared an interest in football as using a premier league club for T8 needs a special approach and would be disastrous if a mentor took the same routine approach towards it as one might to Tesco or Pakistan State Oil. Obviously mentors who are familiar with and follow the English Premier League regularly would be best placed in these particular circumstances. )

”Choice of mentor. This really is a ’horses for courses’ situation. I would normally suggest that you could use an overseas mentor if you wished but in this instance I think you would be better off finding one who is truly based in the UK and shares your interest in football. As I have previously implied: a premier league club though run as a commercial profit making entity is unlike most Ltds or plc’s and therefore needs someone who appreciates this fact. I don’t want to do mentors in general down but there are many who adopt a rote approach to the RAP and for the student it is like jumping through hoops! (I hear stories where students are given a list of ’suitable’ companies that they must chose from for example) You simply cannot adopt a text book approach to the analysis of Arsenal, you very much have to look at it in the context of its sporting environment and select appropriate ratios and KPI;s accordingly (don’t worry if someone has already done the calculation as long as you acknowledge the source it is fine). So whoever you chose as a mentor will need to be prepared to put in a bit of effort from their side and more importantly be able to guide you.

I like your choice and I am sure that this would go down well with a marker (provided the work itself is good of course!) so do not let any mentor try to talk you out of it unless it was your decision in the end to drop Arsenal! I haven’t myself ever looked at any of Arsenal or Chelsea’s accounts but are you saying that Arsenal do not differentiate between their merchandising activities (sales of shirts etc) as it is run as a separate company within the group? A pity if they don’t as I think your RAP would benefit from some segmental reporting comparisons between the two clubs (sponsorship deals, merchandising, match gate ticket sales, and income from TV rights etc). An analysis of players’ salaries would also be interesting as I imagine this is one of the major expenses. Other areas to look at is whether they own their stadium outright or it is leased from outside the group. I would expect that depreciation/amortisation charges may be fairly large – both for the stadium and I would expect players when bought to go on the balance sheet as an asset and then be amortised over their useful playing life (rather than the whole cost be written off in the year they signed). All of these would make your business and financial analysis very interesting (profits on sale of players!!! – normally depreciation/ amortisation schedules in the FS are so boring but for a change these might actually be interesting!). Stock will be important (and stock write-offs for obsolescent playing strips etc) but only if the clubs do their own merchandising (this may be franchised – I really don’t know) – however if it is done outside the group by a totally separate company though then there is really little point in calculating the quick ratios as by definition football clubs would not normally carry stock as part of their business unless as I say they are themselves marketing it to the public.

You may be able to introduce some ’novel’ statistics into your work – how does league position at the end of the season match the revenue received? Can you see patterns for the clubs over the last few seasons? You could discuss the implications of this and see if you can research how much getting into the European Championship League means in terms of extra potential revenue. Just a few of my ideas as although you could (and probably should) do GP and net profit calculations, these will be fairly perfunctory. I suggest that you also look at gearing and investor ratios as part of the standard ratios you need to study and ROCE / ROE / ROA and comment on these for the two clubs

If you are really interested you could perhaps even do some primary research – it very much depends on the grade you want for your report. Normally primary research is both irrelevant and unnecessary for Topic 8 as most plcs are very distant from their customers and in this sense the latter are an anonymous bunch, whereas a club’s fans are a more distinct identifiable group. You could for example ask fans how important it is that the club is seen to buy major players, whether if they were lower in the league they would discontinue their support and how important it is to attend matches, whether they buy the shirts etc etc. and discuss any implications of all of this. (Just by the by I sat next to a guy on a train one evening last year who was off to a Chelsea match with his young son. He reckoned it cost them about £200 per game [including travel] and on average they attended 30 games per season. Being the accountant I commented – gosh that sets you back at least £6k a year then out of taxed income! [wonder if his wife had done the sums – but doubt she had!] 🙂 )

Use lots of nice graphs to illustrate your points (the markers love them apparently as it saves on reading time), so you use your words to make important comments on the relevance of the trends and what has specifically caused them (rather than repeating exactly what the graph has already demonstrated). If you are struggling to get going just get a few things down. The beauty of MS Word is that you can always go back and edit/delete/add as necessary as the whole thing develops – just make sure that you keep a copy on a flash drive in case you lose something and ensure you date your versions so you always use the latest updated version.

I hope I have given you a few ideas and if you are keen to do Arsenal I am sure it is ’do-able’ as a RAP so don’t let any would be mentor talk you out of it! ”

AND HERE WAS AN EXTRACT FROM ANOTHER EMAIL ON THE SUBJECT

”Your overarching objective is to do a business and financial analysis of Arsenal FC and a comparison with Chelsea (statement of the obvious, I know!). When setting out your research questions I think as your proposed RAP is going to be very different from the usual ‘run of the mill’ topic 8 projects it would be appropriate that you explain your research questions. (Many research questions for most T8s are directly related to the financial performance e.g. have the sales of ABC increased over the 3 years and how has this impacted on GP and returns to shareholders?; how has the liquidity of ABC fared over the period? and has gearing been affected? etc.) However these sorts of questions whilst still relevant, on their own would not be sufficient to do a proper business and financial analysis of a club so I think you should spell out the questions you think are appropriate given the context and explain why they are important if you are to do a proper b & f analysis. This would then lead on to your methodology and the research you will be conducting and how you are going to go about it to fulfil the information gathering that will be required to answer the research questions. The research questions are what you want them to be provided they meet the overarching objective, so no probs I think with the correlation. (As I have said preiously any primary research is very novel in a topic 8, so do take some time to read up on Phil Clarke’s article in the Info Pack p.36 as you must show that your survey was properly constructed and conducted if you chose to do a questionnaire)

In Limitations set out all the issues that relate to comparing the data, the shareholder problem and any probs with acquiring relevant data, its validity and problems in interpreting it (different bases used by clubs and transparency of exactly what has been included in which categories of expenses etc. ) or issues in conducting the survey, collecting stats etc.

I think you should include some perfunctory ratios in your analysis e.g. net profit, basic liquidity and shareholder returns however I think you could stress that possibly the latter has less significance than in a normal plc because etc…. But make it clear that you are doing a more 360 degree analysis of the business as this is more appropriate for a football club as its performance is measured by its actual sporting performance which then impacts on its financial performance and this is (as Man U found out) something many clubs cannot control quite in the same way as managers in a normal financial enterprise can.”

I TRUST YOU WILL FIND THESE COMMENTS HELPFUL

REGARDS
TREPHENA – OT OBU FORUM MODERATOR

Hi both,
Thank you very much for your help! Big football fan and yes the ladies are doing well!

I have downloaded Liverpool’s accounts from companies house and will go through them to see what info I can obtain from them and go from there.

Your suggestions are very helpful regarding what to look at as I am a little unsure where to start.

Thanks

Katie

@ Katie – I had more or less a very similar experience like yours. I knew what my project would be as soon as I started my ACCA but when I passed my exams and the time for the project came, it was so difficult to find the starting point.
Two days were spent in drafting the Executive Summary which I scrapped as I decided to read all the financial statements, calculate the ratios and compare them in my head. Once I had done that, I could see the light at the end of the tunnel and it was no turning back from there. Mind you I spent nearly 15 days just reading various books in this project to gather as much understanding of the requirements and the major areas to cater for in my report.
If you love this area then nothing should stop you. Now that I look back, I feel I should have done my project on Cricket Clubs!

@Katie – Gosh! You have put me on the spot as I can’t actually remember what key words I used but possibly “Premier league financial statements” as I have just uncovered this: https://www.theguardian.com/football/2015/apr/29/premier-league-finances-club-by-club

– Which is an updated version of the earlier one.

David Conn their correspondent is obviously very interested in football finances as I found this article (while trying to find out what link I may have used previously!!)

https://www.theguardian.com/football/2014/mar/04/liverpool-financial-fair-play-50m-annual-loss-accounts

You might actually be able to contact David – some journalists are pleased that people bother to research their articles and you never know he may be willing and able to pass something on to you to help your research. (Believe me networking is how the world works) – he can only say no or ignore your request – I think there is an email address via the paper on the article

I also found this:
https://www.forbes.com/sites/bobbymcmahon/2015/04/21/liverpool-fc-posts-2014-profit-2015-will-be-even-better-then-comes-the-bad-news/

(Both of these were using the search: Liverpool FC financial statements )

@M.Iqbal – from your comments about choosing a topic/company you probably now appreciate then why I want students to choose a company they are interested in – it fires their enthusiasm and this usually comes out in the quality of their work. Maybe as a mentor you can try to encourage this? It tends to be in both mentor and mentee interest (although it does mean a bit more effort on the part of a mentor)

@Katie BPP was the best as far as I was concerned. I thoroughly read it and made sure I noted the important points. Also just a polite word of advice, Katie keep all the information which you have received safe BUT first go through the financial statements, calculate ratios and get a broader picture in your head then you get back to the websites trephena suggested. That would make a big difference.

@Trephena Agree with what you say. As a mentor I do tend to encourage students in choosing what they are passionate about but sometimes they might get carried away in their RAP and you can see a confused approach in the RAP.