Financial Analysis Interserve Essays - 6782 Words

1. INTRODUCTION 2 2. Industry Background 2 3. Company Information 2 3.1 Geographic (Operating Profit contribution) 2 3.2 Major Stakeholder and Management and Governance 4 4. Objectives 5 5. Measurement and Performance 5 6. Financial Ratio Analysis 6 6.1 Liquidity Ratios and Short-Term Debt-Paying Ability 6 6.2 Long-term Debt Ratio 8 6.3 Profitability Ratios 9 6.4 Investor Analysis Ratios 10 7. Trend Analysis 11 7.1 Horizontal Analysis 11 7.1.1 Income Statement Horizontal Analysis 11 7.1.2 Balance Sheet Horizontal Analysis 14 7.2 Vertical Analysis 16 7.2.1 Vertical Income Statement Analysis 16 7.2.2 Vertical Balance sheet Analysis 18 8. Memo 21 9. Appendix 23 9.1 Interserve FinSaS input 23†¦show more content†¦6.1.1 Efficiency Accounts receivables turnover and Accounts receivables turnover in days depicts how efficiently the company converts account receivable to cash. If a company doesn’t have enough cash or cash-like asset, the key to debt paying ability is the time it takes to convert less liquid current asset to cash (Michael, 2011). This can have a significant effect on the company’s cash flow. Comparing Interserve to Kiers we can observe Kiers superior ability in convert account receivables to cash. 6.1.2 Liquidity The relationship of current assets to current liabilities is an important indicator of the degree to which a firm is liquid (Woelfel, 1994). Graph 6.1 Current Ratio and Acid Ratio evaluates current asset available to pay current obligations whereas acid ratio excludes inventories from the current assets because of its relative illiquidity and evaluates the relationship between quick assets to current liabilities. A comparison between Interserve and Kier shows disparity in both acid and current ratios. Interserve has a lower current ratio (0.82) to that of Kiers (1.19) but aShow MoreRelatedBusiness Analysis : Kier Group Plc1939 Words   |  8 Pagesare Balfour Beatty, Carillion, Laing O Rourke, Interserve and Morgan Sindall. The three latest ones outrun Kier Group by a very small margin in recent turnover. Balfour Beatty and Carillion have dominated industry for considerable number of years, yet Laing O Rourke, Interserve and Morgan Sindall are very contiguous competitors so Kier Group has a lot of chances to outstrip them within the next few years. 2. Ratio Analysis 2.1. Ratio analysis importance and usefulness Before continuing to