)“Investment Decision based on Ratio Analysis for a company during a 2-year period”
Company chosen from London stock exchange :
Admission Date Company Name ICB Industry ICB Super-Sector Country of Incorporation World Region Market International Issuer Company Market Cap (£m)
17/06/2014 B&M EUROPEAN VALUE RETAIL S.A. Consumer Discretionary Retail Luxembourg Europe MAIN MARKET Yes 6,339.77
Guidance Notes:
1.Introduction and background of the industry
The industry will be Consumer Discretionary – Retail,
we need to talk about
1. the history of this industry (consumer discretionary, retail shops) over the years
2. challenges with the booming of the online market and how the brick and motors stores start moving to online and the growth of online business
3. covid 19 impact on retail business offline and online
4. financially is the industry growing and healthy ?
2.Introduction and background of the company within the industry
Brief about the company
B&M EUROPEAN VALUE RETAIL S.A.
https://www.londonstockexchange.com/stock/BME/b-m-european-value-retail-s-a/company-page
History – vision – mission – growth year over a year – what is the position vs competition – who is the main competitor – what is there market share – how the company fit in the industry …
3Analysis of qualitative information including chairperson’s statement, director’s report, auditor’s report, look and feel of the annual reports, photos, graphs, tone of language, etc.full year 2020
All qualitative information needed to be sourced properly and documented with proper sourcing.
Critical analysis for the chairman 2020 year report analysis tone of language is it optimistic or not – what is the concerns about the employees, company, growth, sales, profit, demand and then analyse why we want to invest in this company or not (justify our decision based on chairperson statement …)
4.Computation of ratios in various groups including liquidity, profitability, solvency, activity, valuation, etc. (calculation should be done for both the years for the company).
Analysis of all ratio, all numbers I need to have beside it the formula and the page where the value is taken and than a chart
Calculation 2020 vs 2019
And calculation 2020 vs the market or another company from the same industry
After each calculation what Is our intake from this ratio and how can impact our decision on investing
(Main company means 2020 vs 2019)
(Benchmark company ) either the industry if based ratio available online or competition
. Ratio Analysis
Example :
(i) Profitability Analysis
Profitability analysis indicates how well the company has been able to maximize the return on the assets invested in the company and measure a company’s ability to use its assets to make a profit.
Table No. 1: Profitability ratios (Main Company)
Main Company
2019 2020 Industry
1 ROA (Return on Assets)
2 ROE (Return on Equity)
3 Net Profit Margin
4 Gross Profit Margin
Same for benchmark and for all other ratios
Table No. 1: Profitability ratios
Table No. 2: Liquidity Ratios
Table No. 3: Gearing Ratios
Table No. 4: Activity Ratios
Table No. 5: Investment Ratios
Chart for all the above
With analysis
F5.Comparative analysis of the financial performance of the firm over 2-year period (using the above calculations and other literature).
After having the calculation we need to analyse the financial performance year over year and take a decision if it is good company to invest or not Why? Find reasons outside numbers press release/ news/ website/ chairman?
6.Comparative analysis of the company vis-a-vis the industry (using the above calculations and other literature)
Last part is comparison with the industry to see it is a good to go for investment or not
