AAF044-6 Accounting and Finance Assignment Sample
AAF044-6 Accounting and Finance Assignment Sample
Summary
The study paper has been based on the recognition evaluation, and determination of the corporate finance approaches, and framework that has been considered by using financial management along with the portfolio of the investors is to be determined. Hence, the overall analysis of the financial performance based on the last three years is to visualize the financial position of FirstGroup Plc. In the current study paper financial health along with the market performance of FirstGroup Plc along with its competitors has been analyzed and prevented by considering the “ratio analysis framework”.
Additionally, it is also presented that the DDM model that has been formed b using the FCFF is a technique for valuing a company’s stock by discounting the company’s future dividends to their current value (Huu, and Ngoc, 2021, p.14). Therefore, it is required to determine the “observe and forecast the future performance” of the Groups based on the stock performances. This required reporting to aims that may refer to conducting a “pear analysis for investors to select the best-performing and profitable stock compared with computers and industry performance”.
(i) Introduction
Key feature
First Group Plc refers to leading the business stability leading with private sectors of Public transportation. The company refers to providing convenient, and easy mobility, quality improvement, and also to connecting with live performances to travelers by connecting communities, and people (Campisi, et al. 2021, p.12). Hence, transporting customers for business, health, social, education, and leisure purposes is to be determined. It is founded in 1986 in London, the UK that operates through the “First Bus and First Rail segments” (Firstgroupplc.com, 2023).
The segment refers to the offer to local bus services providing services with a fleet of approximately with the numbers of buses 4900 in the UK (Namoun, et al. 2021, P.14). Furthermore, the first rail segment that refers to operates as a “passenger rail network”, that refers to provisioning commuter, regionals, long-distance, and seller services through a portfolio of the “South Western Railway”, “Great Western Railway”, and “TransPennine Express”.
Key metrics
The company engaged with the “financial KPIs” as key metrics such as revenue growth, EPS, ROCE, and adjusted profit of the company which together drive value creation and cash flows (Li et al. 2021, pg.02). It is also observed that the discontinued operation of revenue at £2203.2 million at the stages of 2021, and £3111.8 million in 2020 (Firstgroupplc.com, 2022).
That refers to reflecting the reduced activity at the level due to the situation of the pandemic. The reorganization of the adjusted EPS, incurred decreases by 4.4 p to 2.4 p in 2021, and 6.8p in 2020, which refers to reflecting the lower adjustment that operated with the higher profitability that rolling to stick lease cost (Haslam et al. 2021, pg.09). The financial stability informed the performances of the ROCE at the stages of the pre-IFRS 16 that were recognized at 6.4% to prior the year on comparable basis stability at 9.1% based on the constant exchange rates and 8.2% as reported.
Key resources
As per the evaluation of the key resources of the company FirstGroup Plc is based on the financial, physical, intellectual, and human resources. The resilience and dedication of more than 1000000 employees working with the company that has been vividly demonstrated due to COVID is to be determined.
Therefore, the company is committed to the process of recognizing human rights on the basis of the global. It is also committed to the process of the prevention of “human trafficking, and modern slavery”, in different forms that extended to all business transactions, and dealing with the involved, regardless of sectors, and locations.
Objectives
As it is a “private sector provider of public transport” company engages with the stability of a vital part of society that also provisioning opportunities to get comfort the transportation (Firstgroupplc.com, 2023). The key objective of the company concluded with the stability of the business based on each of the Directors may refer to providing objective challenges that refer to managing the willingness to the stand-up performances (Cherian, et al. 2021, p.13).
(ii) Evaluate the financial statements
The bus, train and tram services provided by the British international transportation corporation FirstGroup Plc are among the choices. The financial performance of the company has fluctuated in the last three years (Sari et al. 2022). As the revenue declined in 2021 nevertheless, in 2022 revenue of the company has been This demonstrates both the continued susceptibility and unpredictability of the transport industry as well as the company’s potential for recovery from the pandemic’s difficulties.
The financial statements of the company also play an important role to reflect on different ranges of health such as the source of revenue and expenditure, which has been incurred to perform business activities like operating cars, rails and train service processes. On the other hand, the balance sheet of an entity also plays an important role to reflect overall financial health such as stability capability and liability. Each aspect plays an important role in managing different operations along with acquiring financial resources from the market. There are different assets such as plants and land used by the company to grant a loan from investors and banks.
Over the previous three years, FirstGroup Plc.’s gross profit has also improved, showing increased profitability. However, it’s significant to notice that relative to the prior year, gross profit growth has slowed in 2021 and 2022, which could be cause for concern. Over the past three years, FirstGroup Plc’s high debt levels have been a significant obstacle. Despite a slight decrease in debt in 2022 when compared to the previous year, the total debt of the company has always been high.
Concerning, this may make it more difficult for the business to make investments in future growth or to deal with unexpected difficulties (Indrawan and Damayanthi, 2020, p.15). In addition, the business’s value has decreased over time, which could be attributed to increased levels of responsibility or other operational difficulties. In any case, the fact that the value has decreased by a small amount is crucial because it may suggest that the business has managed its finances effectively overall.
FirstGroup Plc. has spent the past three years possesses a wide range of experiences. The organisation can choose to continue providing its services or to overcome the challenges posed by the pandemic. However, there are also significant obstacles, such as an excessive amount of debt and declining current assets (Markonah et al. 2020). The business ought to address any useful disappointments or hardships while moreover mindfully managing its financial position and looking for astounding opportunities to place assets into the future turn of events.
From the viewpoint of managing order support to the ultimate aims of the company, the business is required to reform the relationship, which may likely to affects the appearance of the business stability. Therefore, the reorganization of the business of converting the assets kind of liquidity is to be determined. For, the year 2021, it is visualized that the current ratio was 0.78, rising to 0.76 in 2022.
The process of the engagement at to the section of the evaluation at to the “overall presentation of the firm in a more effective manner” is to be determined. It is also determined that the engagement of the current assets as well as “current liabilities is the most crucial factor of the firm”. On the other hand, the evaluation of the quick ratio as well as the current ratio of the firm has also been stated as per the “effective management decision-making for the overall presentation of the firm”.
As per the visualization of the solvency ratio it is determined that Group Plc recognized the higher risk for the year 2021, of the “debt-equity-ratio-”, at the higher values of 6.19, and 6.17 for their respective years 2021, and 2020 respectively. In addition, its “competitor National Express” suffered from negative ROE, which may create challenges for the company in the future as investors are investing in any business with a better return. It is recognized at 6.4% to prior the year on comparable basis stability at 9.1% based on the constant exchange rates and 8.2% as reported.
(iii) Overview of Performance of FirstGroup plc
FirstGroup Plc and Public Express Gathering PLC are two of the main public transportation organisations in the UK. This section also consists of the calculation and analysis of their financial ratios for the years 2020-2022 in order to evaluate their financial performance. The current section also discusses different ranges of ratios such as profitability which assist the company to compare performance with its competitor. Main competitor of the company mainly focuses on different aspects such as revenue growth, net profit and debt.
Profitability:
Notwithstanding, FirstGroup Plc had a decline in net overall revenue from 2021 (47.33%) to 2022 (46.20%). However, National Express Group PLC has had a negative net margin for all three years, while FirstGroup Plc has only had a positive net margin since 2022. As a result, both businesses have struggled with net profit margins.
Liquidity:
The ongoing proportion of the two organisations demonstrates their capacity to meet their transient commitments. In 2021, FirstGroup Plc current ratio was 0.78, rising to 0.76 in 2022 (NGUYEN et al. 2020, p.14). On the other hand, National Express Group PLC had a current ratio of 0.88 in 2021 and 0.83 in 2022. The ability of both businesses to meet their short-term obligations is also shown by their quick ratio, with National Express Group PLC having a higher quick ratio in both 2021 and 2022. Therefore, it is stated that FirstGroup Plc has increased ability as compared to its competitor.
Solvency:
The high debt-to-asset ratio of both businesses indicates a high level of leverage. Notwithstanding, Public Express Gathering PLC has a lower obligation-to-resource proportion contrasted with FirstGroup Plc. In 2022, National Express Group PLC had a slightly lower debt-to-equity ratio, indicating that both businesses heavily rely on debt to fund their operations (Rashid, 2021, p.16).
Market performance:
The resource turnover proportion of the two organisations shows how productively they utilise their resources for creating income. In 2022, FirstGroup Plc had an asset turnover ratio of 0.48, while National Express Group PLC had an asset turnover ratio of 0.53. This means that National Express Group PLC uses its assets more effectively to generate revenue than FirstGroup Plc does. Besides that, the ROE ratio of the company has increased in the current financial years due to an increment in total profit as well as revenue.
In addition, its competitor National Express suffered from negative ROE which may create challenges for the company in future as investors are investing in any business with a better return. ROA of FirstGroup Plc is also fluctuating at 0.17 times which has increased compared with the last two years’ ROA indicating that the company has maintained better efficiency. On the other hand, its competitor has suffered from declining financial issues.
Despite improvements in its liquidity ratio and gross profit margin, National Express Group PLC struggles with negative net profit margins. In 2022, FirstGroup Plc gross profit margin decreased, but its net profit margin increased. The two organisations depend vigorously on obligation, yet Public Express Gathering PLC has a lower obligation to resource and obligation-to-value proportion (Bintara, 2020, p.16).
Utilising its assets to generate revenue more effectively, National Express Group PLC is superior. At long last, Public Express Gathering PLC has a higher P/E proportion than FirstGroup Plc in 2022, demonstrating that financial backers have more trust in Public Express Gathering PLC’s future profit potential.
In this division of the section refers to introducing the determination of the changes based on the overall experiences of the competitors at the level of the firm evaluation and management representing the effective manner of FirstGroup Plc. Additionally, the competitor’s analysis introduces the business stability or the organization that has been calculated based on the last three years to establish the effectiveness of the comparison at the different years.
Therefore, the total revenue of the company at the discounted operations decreased by 11.7% due to the pandemic situation is to be determined. Furthermore, introduced revenue with its continued operations at £4641.8 million in 2021, and £4642.8 million for 2020, which is a decrease of £567.4 million compared to the prior years.
Furthermore, the evaluation of the profitability ratio analysis of the company represents the increasing profitability over the years. Thus, it is also required to observe the consideration of the analysis of the different aspects based on the “environmental economic and business model” of each business entity to make an investment or insure “better performance there for field investment in the future”.
On the other hand, the balance sheet of an entity also plays an important role to reflect overall financial health such as stability capability and liability (Mazanec, and Bartosova, 2021,p.14). Each aspect plays an important role in managing different operations along with acquiring financial resources from the market. There are different assets such as plants and land used by the company to grant a loan from investors and banks.
1.Valuation of methods used by the asnalysts
2.Most commonly used multiples
2.1 multiple based on capitalization
- Price earnings ratio (PER).
Price to cash earnings .price to sales . 4. Price to leveld free cash flow . 5.price to book value
6.Price to units 7.price to customer .8. price to unit .
Relative multiples 1. With respect to the firms history. 2. With respect to the market 3. With respect to industry.
- volatility of the most widely used parameters for multiples
- analysis recommendations
This paper focuses on equity valuation using multiples. the basic conclusion is that multiples almost always have broad dispersion, which is why valuations performed using multiples are highly debatable.
However multiples are useful in a second styage of the valuation after performing the valuation using another method, a comparison with the multiples of comparison with enables us to calculate the valuation performed and identify the difference between the firm valued and the firm it is compared with
(iv) Supporting arguments ..
The analysis of the report it is visualized that each of the directors of the company that been functioning at the stages of the evaluation of the business performance. The financial statement of the Group has been prepared in accordance with “UK-adopted international accounting standards”. It refers to providing detailed knowledge with a true, and fair view of the liabilities, assets, financial positions, and profitability of the company.
The requirement of business stability is based on the financial statement the company has prepared the financial statement using the UK accounting standard that comprises FRS 101, which provides a true, and fair view of the statements. Furthermore, the strategic report may also include a fair review of the development and the uses or performances of the business that acquire the positions of the companies together with the description. However, the company occasionally experiences negative FCFE, such as in FY 2019 and FY 2021.
This shows that the organization’s money inflows were not adequate to meet its capital consumptions, obligation commitments, and working capital necessities. This could be because of several things, like aggressive expansion plans, higher debt repayments, or a slowdown in the economy. As per the analysis of the Dividend Growth Model, it is utilized that the monetary information is accommodated by Asian Paints LTD.
Hence, it is representing the support of a new joint venture that appraises the stock cost utilizing DDM. The acceptance of the requirement of the pace of return (Ke) of 8.45%, and a normal profit development pace of – 38.98%, we can work out the assessed profit for 2025 to be 0.48. Therefore, it is introducing that the changes in the section will refer to the major stakeholders in a stock-market listed company in terms of customers, internal stakeholders, and External stakeholders.
Conclusion
This assignment is acknowledged on the ratio analysis and financial performance of “FirstGroup Plc“. It is illustrated by the overall financial ratios and “market analysis” of this business. As a result, it can be concluded that the ratios have been performed on the current financial ratio. It is analyzed to evaluate the valuation of the company. Understanding the integrated financial position of the company.
In this report it can be analyzed that overall changes have been determined on financial ratios like solvency ratios, Profitability performance, and Liquidity ratio has been determined with a comparison with competitor company “National Group Plc“. This report depicts to acknowledge a true evaluation of the business performance. Further, it includes a strategic performance analysis which fair review of development in organizational consumption, money flow, and working capital necessity.
Reference
Journals
Bintara, R., (2020). The Effect of Working Capital, Liquidity and Leverage on Profitability. Saudi Journal of Economics and Finance Abbreviated, 4(1), pp.28-35.
Campisi, T., Severino, A., Al-Rashid, M.A. and Pau, G., 2021. The development of the smart cities in the connected and autonomous vehicles (CAVs) era: From mobility patterns to scaling in cities. Infrastructures, 6(7), p.100.
Cherian, J., Gaikar, V., Paul, R. and Pech, R., 2021. Corporate culture and its impact on employees’ attitude, performance, productivity, and behavior: An investigative analysis from selected organizations of the United Arab Emirates (UAE). Journal of Open Innovation: Technology, Market, and Complexity, 7(1), p.45.
Firstgroupplc.com, (2022), 10-firstgroup-annual-report-2021-key-performance-indicators.pdf, 2022, Available at: https://www.firstgroupplc.com/~/media/Files/F/Firstgroup-Plc/indexed-pdfs/2021-ARA/10-firstgroup-annual-report-2021-key-performance-indicators.pdf (Accessed on: 21.04.2023)
Firstgroupplc.com, (2023), About FirstGroup, 2023, Available at: https://www.firstgroupplc.com/about-firstgroup.aspx (Accessed on: 21.04.2023)
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