Essays on Rolls-Royce Analysis Assignment

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The paper "Rolls-Royce Analysis" is a great example of an assignment on finance and accounting. Q1 Horizontal and vertical analysis Horizontal analysis compares the performance of Rolls Royce over the two year period and 2009 is selected as the base year. Vertical analysis, on the other hand, reports each balance sheet and income statement item as a percentage of one selected item mainly total assets and sales for balance sheet and income statement respectively. Income statement- Horizontal analysis Rolls Royce         Income Statement- Horizontal Analysis         For the year ended December 31st, 2010           2010 2009 Amount Percentage increase/(Decrease)   £ M £ M £ M % Revenue 11,085 10,414 671 6 Cost of sales (8,885) (8,303) (582) 7 Gross profit 2,200 2,111 89 4 Other operating income 95 89 6 7 Commercial and administrative costs (836) (740) (96) 13 Research and development costs (422) (379) (43) 11 Share of results of joint ventures and associates 93 93 - 0 Operating profit 1,130 1,174 (44) -4 Profit/(loss) on disposal of businesses 4 (2) 2 -100 Profit before financing and taxation 1,134 1,172 (38) -3 Financing income 453 2,276 (1,823) -80 Financing costs (885) (491) (394) 80 Net financing (432) 1,785 (2,217) -124 Profit before taxation 702 2,957 (2,255) -76 Taxation (159) (740) 581 -79 Profit for the year 543 2,217 (1,674) -76 Attributable to:     -   Ordinary shareholders 539 2,221 (1,682) -76 Non-controlling interests 4 (4) 8 -200 Profit for the year 543 2,217 (1,674) -76 Income statement- vertical analysis Rolls Royce         Income Statement- Vertical Analysis     Percentage of Revenue For the year ended December 31st, 2010 2010 2009 2010 2009   £ M £ M % % Revenue 11,085 10,414 100 100 Cost of sales (8,885) (8,303) (80) (80) Gross profit 2,200 2,111 20 20 Other operating income 95 89 1 1 Commercial and administrative costs (836) (740) (8) (7) Research and development costs (422) (379) (4) (4) Share of results of joint ventures and associates 93 93 1 1 Operating profit 1,130 1,174 10 11 Profit/(loss) on disposal of businesses 4 (2) 0.04 (0.02) Profit before financing and taxation 1,134 1,172 10 11 Financing income 453 2,276 4 22 Financing costs (885) (491) (8) (5) Net financing (432) 1,785 (4) 17 Profit before taxation 702 2,957 6 28 Taxation (159) (740) (1) (7) Profit for the year 543 2,217 5 21 Attributable to:     - - Ordinary shareholders 539 2,221 5 21 Non-controlling interests 4 (4) 0.04 (0.04) Profit for the year 543 2,217 5 21  

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Brealey, R., & Myers, S., 2003. Principles of corporate finance. New York: McGraw-Hill.

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Fridson, M., & Alveraze, F., 2002. Praise for Financial Statement Analysis A Practitioner's Guide. New York: John Wiley & Sons, Inc..

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