Faculty of Business and Law
Business School
BA (Hons) Accounting & Finance
Level 6 - (30 Credits)
Corporate Reporting
(Unit code 5R6Z0038)
Assignment Handbook
2020/2021
Unit leader: Anna Hardy-Watmough: NBS Room 4.29
a.hardy-watmough@mmu.ac.uk
BA Accounting & Finance
Year three (Level 6)
Corporate Reporting Assignment Handbook
Contents
Assignment brief ................................................................................................................................. 3
Tutorial week 1: Selecting your company and performance analysis ................................................ 4
Tutorial Week 2: Investor information ............................................................................................... 8
Tutorial Week 3: Impact of Covid-19 and presentation ................................................................... 11
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BA Accounting & Finance
Year three (Level 6)
Corporate Reporting Assignment Handbook
Assignment brief
For the purpose of this assignment, you are a financial journalist working for the online
investment magazine ‘InvestIt!’ You have been asked to analyse a selected listed company in
the retail sector, and write an article that explains whether you would advise investing in this
business. The specific areas for consideration are:
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Overview of the retail sector in the country in which your chosen company operates
in 2019, and an introduction to your chosen company within it.
Analysis of the performance of your chosen company for the financial year ended
2019, and in comparison to the sector/ previous year.
Analysis of investor information of your chosen company for the financial year ended
2019, including share price movements to 31st December 2019, and comparison to
the sector/ previous year.
Impact of Covid-19 on your chosen company and the retail sector for 2020.
A conclusion as to whether you would currently invest in your chosen company.
The article should be 3,000 word maximum in length (+/-10%), and suggested word
counts for each area are as follows:
o Sector/company introduction – 500 words
o Performance analysis – 1,000 words
o Investor analysis – 1,000 words
o Impact of Covid and investment decision – 500 words
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The article should be in a style suitable for publication in a magazine, using proper
business English and presented appropriately.
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All sources must be suitably referenced.
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An executive summary is NOT required.
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Marks will NOT be awarded for calculations, but rather the quality of the analysis.
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Marks will be split over the parts of the article as follows:
Section
Introduction
Analysis of financial performance
Analysis of investor information
Impact of Covid-19 and conclusion
Presentation
CR Assignment Handbook
Marks
15 marks
25 marks
25 marks
15 marks
20 marks
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BA Accounting & Finance
Year three (Level 6)
Corporate Reporting Assignment Handbook
Tutorial week 1: Selecting your company and performance analysis
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Financial Analysis is a key role performed within organisations. It is an important
aspect of corporate reporting.
The purpose of this assignment is to develop your analysis skills, and give you a
wider understanding of business and commercial issues.
You can work together to perform research and to generate ideas, but please be
aware that your submission is individual.
Please contact your tutorial lecturer or unit leader if you have any questions.
Due date is Monday 26th October at 9pm. Work submitted within 5 working days of
the due date will be marked and capped at 40%, after this time work submitted will
be awarded zero (unless a student has approved exceptional factors).
Your assignment will be submitted online only, via the CR Moodle site.
We will use Easyjet as a sample company to work through the analysis
This week we will firstly consider:
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What is analysis?
How do we perform analysis?
How do we use the financial statements?
How do we calculate ratios?
What do they tell us?
Where can we get sector information?
What is not included in financial information?
Where else can we look for information?
What is analysis?
• Analysis is the use of financial statements or other financial information to evaluate
the past, current and expected future performance of a company.
• We perform analysis both internally and externally. Internally, businesses will
compare results to budgets, or prior periods. Externally, business analysts analyse
the results of large Plcs and look for reasons for profit/ revenue variances etc.
• We see business analysis all the time on the business news, in the press etc. What
have you seen/ read recently?
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BA Accounting & Finance
Year three (Level 6)
Corporate Reporting Assignment Handbook
How do we perform analysis?
• Take the financial statements and compare:
o To prior year
o To competitor
o To industry averages
• Can also use interim/ other internal financial information if work for a company
Important points
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Always use group financial statements (contains everything)
Think about format/ presentation (may not be same as in ‘exam world’)
How do we calculate ratios, and what do they tell us?
• In FR (2nd year).
• Various ratios, in different categories. This time will consider performance/
profitability.
• Note – you do NOT need to calculate your own ratios (available via databases e.g
FAME, or in the financial statements). You may want to calculate if considering the
impact of one-offs or for some more unusual figures.
Performance (Profitability)
Concerned with profits generated
a. Gross Profit (expressed as percentage)
Gross Profit
Revenue
How much profit generated at gross level (so just excluding cost of sales).
Affected by?
b. Operating profit (expressed as percentage)
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Operating Profit
Revenue
BA Accounting & Finance
Year three (Level 6)
Corporate Reporting Assignment Handbook
Profit generated after expenses, but before interest and tax taken into account,
(not performance related). How does this differ from GP?
c. ROCE
Operating Profit
Capital Employed
(Equity + long term
debt)
Measure of efficiency, how much profit generated by the long-term capital employed in the
business. A target ROCE is often included in company key performance indicators (KPIs). Can
split broken down into OP% x net asset turnover, if want to compare businesses.
Can use other profit measures, e.g. net profit %, but these tell you mostly the same thing.
Remember:
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Can vary methods used to calculate ratios, these are not absolute.
Strip out ‘one-offs’ (exceptionals) to get a better view of sustainable performance.
Cash also important – can use cashflow statement and substitute cash for profits to
see if company in good cash position. E.g. cannot pay a dividend if no cash to pay it!
Calculations are not as important as the analysis at this level.
Where can we get sector information?
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Library databases e.g Business Source Premier, Mintel
FT.com
Online sources
What is not included in financial statements?
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Annual reports contain lots of non-financial information, as seen above.
Financial statements are historic however, and so don’t include current and future
information (directors can include in their own reviews). For investor analysis we will
need to look at more up-to-date information.
The annual report will try to highlight where the company has done well, will not
include negative reports e.g. press reports. We will have to look at other sources as
well.
Where else can we look for information?
• What do you think?
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BA Accounting & Finance
Year three (Level 6)
Corporate Reporting Assignment Handbook
Selecting your company
• Who are you interested in?
• Who do you think you can talk about?
• Which companies have been in the news?
Industry information
• Databases – what information is on there?
• FT.com
• Start to get a feel for your country/retail industry within
Chosen company
• Access the financial statements
• Calculate/find the common ratios
• Use FAME to see what information there is
• Can use annual report
Performance
• How do ratios look?
• Why?
Sample company
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Financials – FAME
Industry sector information
2019 focus
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BA Accounting & Finance
Year three (Level 6)
Corporate Reporting Assignment Handbook
Tutorial Week 2: Investor information
Investor Ratios
Q – What are the areas of interest for investors?
Solvency
Gearing
Long term debt
Long term debt + Equity
How business financed – debt or equity. No perfect method but need to
ensure sustainable.
Interest Cover
Profit before interest
Finance Costs
How far can cover finance/interest costs with profits.
Investor ratios
P/E Ratio
Share Price
Latest EPS
Indicates risk and confidence in investment. High = high confidence. Used in
the real world by analysts.
Dividend yield
Dividend per share
Market price per share
Return on investment in shares, relative to market price.
Dividend cover
Earnings per share
Dividend per share
Ability of entity to maintain existing dividends (use in conjunction with yield). If high, likely
entity can maintain level of dividends.
Share price
Share price fluctuations occur for many reasons:
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General business events.
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BA Accounting & Finance
Year three (Level 6)
Corporate Reporting Assignment Handbook
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Sector specific events.
Company specific events – external and internal.
For large fluctuations, look for explanations.
See the following for Easyjet, compared to Ryanair (from 1 October- 31 December 2019):
Source: London Stock Exchange
What would you look at here?
News sources
You can google your chosen company, choose information from reputable sources (and
don’t forget the library resources, as these are reputable and paid for!). For example,
googling Easyjet business news on 24th August 2020 gives the following:
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BA Accounting & Finance
Year three (Level 6)
Corporate Reporting Assignment Handbook
Include information you think is relevant to your chosen company.
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BA Accounting & Finance
Year three (Level 6)
Corporate Reporting Assignment Handbook
Tutorial Week 3: Impact of Covid-19 and presentation
Covid-19
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Impact across all business sectors
Some suffered, some benefited
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What is the impact on Easyjet?
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What is the impact on retailers?
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BA Accounting & Finance
Year three (Level 6)
Corporate Reporting Assignment Handbook
Your article
There are various online magazines you can look at. E.g https://www.pqmagazine.com/
or https://ukinvestormagazine.co.uk/
Articles should be well presented and engaging, the style can be more casual than a
report, but you must use proper English and write in full sentences. Also, consider
graphics to assist with your analysis.
All assignments must be submitted by Monday 26th October at 9pm. Submit your
assignment on Moodle. If you submit within five working days of the submission
deadline, your assignment will be marked but capped at 40%. Any submissions received
after this will be awarded zero marks (unless there are approved exceptional factors).
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