University of Bedfordshire

Individual Report
Financial Analysis (AAF001-6)
Assignment 1-B
Prof. Mohammed El Daly

Prepared by
Moin Ul Haq Jan

Msc. International business and Management
November 13 2010

CONTENTS

Introduction

Background

Analysing Financial and Profitability Ratios

Current Ratio Liquidity Ratio Solvency Ratio Assets turnover Ratio Profit Margin Debtor Days Creditor Days Gearing Ratio Stock Turnover Ratio Return on Capital Employed Return on Shareholders’ Funds

Conclusion and Recommendation

Appendix …show more content…
This tool helps us understand the liquidity of a company.
In th GBP
31/03/2010
31/03/2009
31/03/2008
31/03/2007
Current assets-Socks 275,600 285,900
248,200
112,000
Current Liabilities (386,800) (310,300) (271,100)
(252,900)
Liquidity Ratio
0.71
0.92
0.92
0.81
Interpretation and Explanation
In this case, BBC over the last three years was not able to meet its liabilities and obligations as the ratios are under the benchmark of 1. BBC has announced to freeze its licence fee for the next six years at £145.50 and the company is trying to cut down on its expenses.

3. Solvency ratio helps us analyse the ability of a company to pay its long term liabilities.
Ratio
31/03/2010
31/03/2009
31/03/2008
31/03/2007
Solvency Ratio
19.78
14.28
21.33
28.94
Interpretation and Explanation
In this case we can see BBC in the year 2007 was at a stable position with a solvency ratio of 28.94% which means the company was able to pay its long term liabilities. 2007 was profitable year for the company the long term liabilities were £(38,800) th, with the no’ of employees 1613, which were lesser as compared to the current year. There was a substantial decrease in the solvency %age in the year 2008. In the year 2009, liabilities rose up to £ (237,200) th giving the company a challenge to meet the obligation. The company jumped from 14.28% of solvency to