Essays on Manchester Money Universal Plc Investing in the Shares of Coppice Plc Case Study

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The paper "Manchester Money Universal Plc Investing in the Shares of Coppice Plc " is a perfect example of a finance and accounting case study. Coppice Plc which is into the hotel business is looking towards tapping the low-end consumers by having hotels which are provided at low cost. This has allowed Coppice Plc to spread its hotel chain entire across the UK and looks towards using the tag line “ No Frills Nice Bills” . The report thereby looks towards presenting information on the financial information of Coppice Plc so that Manchester Money Universal Plc can look towards acquiring 20% shares of the company.

The paper also looks towards examining whether investing in the shares of Coppice Plc will be beneficial for Manchester Money Universal Plc. Financial Analysis Organizations look towards analyzing the financial information of companies so that they are able to understand the manner in which the company has performed over the years and also provides useful insights into the future actions of the company. Evaluating financial information helps all stakeholders and helps to identify the steps that will benefit them (Moyer, Mcguigan & Kretlow, 2003).

Below is the financial analysis of Coppice Plc Profitability Ratios This ratio has prime importance for every person associated with the company as it helps them to identify whether the business is able to generate adequate profits out of its normal business operations. This helps investors and others to understand the future prospects of the company (Ryan, 1996). The ratios are as Return on Total Assets: The graph looks as The return on total assets has increased for Coppice Plc in 2011 because The profits have grown by 2.44% The total assets have decreased in 2011 by 6.56% The efficiency in the use of assets to multiply the profits have increased for Coppice Plc highlighting better use of assets Net Profit Margin: The graph for the same is as The net profit margin has increased for Coppice Plc in 2011 because Net Profit has increased by the tune of 2.44% in 2011 Sales have come down by 3.28% in 2011 Coppice Plc has been able to reduce the indirect cost as a decrease in sales has resulted in increased profits suggesting cost-cutting methods have been used.

References

Deloof, M. 2003. Does Working Capital Management Affect Profitability of Belgian Firms? Journal of Business Finance & Accounting, 30(3&4), 573-587.

Moyer, R. C., Mcguigan, J. R., & Kretlow, W. J. 2003. Contemporary Financial Management (Ninth ed.). United States of America: Thomson.

Peel, M. L. & Wilson, N. 1996. Working capital and financial management practises in small firm sector. International Small and Business Journal, 14(2), 52-68.

Ryan, H. 1996. The Use of Financial Ratios as Measures of Risk in the Determination of the Bid-Ask Spread. Journal of Financial & Strategic Decisions, 9 (2), 33-41

Saleem, Q. & Rehman, R. 2011. Impacts of Liquidity Ratios on Profitability. Interdisciplinary Journal of Research in Business, 1 (7), 95-98

Appendix

Ratio of Copplic Plc

RATIOS FORMULAS 2011 2010 2009

ROTA PBIT / (TOTAL ASSETS-INTANGIBLE)* 100 126 / (1111 - 100) * 100 = 12.46% 123 / (1182-100) * 100 = 11.37% 98 / (1022-100) * 100 = 10.63%

NET PROFIT MARGIN PBIT / SALES * 100 126 / 354 * 100 = 35.59% 123/366 * 100 = 33.61% 98 / 320 * 100 = 30.63%

GROSS PROFIT MARGIN GROSS PROFIT / SALES * 100 207 / 354 * 100 = 58.48% 216 / 366 * 100 = 59.02% 192 / 320 * 100 = 60%

CURRENT RATIO CURRENT ASSETS / CURRENT LIABILITIES 46 / 157 = 0.29 times 42 / 161 = 0.26 times 42 / 122 = 0.34 times

QUICK RATIO CURRENT ASSETS - STOCK / CURRENT LIABILITIES 46 - 2 / 157 = 0.28 times 42 - 2/ 161 = 0.25 times 42 - 2 / 122 = 0.33 times

STOCK TURNOVER COST OF SALES / STOCK 147 / 2 = 73.5 150 / 2 = 75 128 / 2 = 64

INCOME GEARING INTEREST PAYABLE / PBIT * 100 24 /126 * 100 = 19.05 % 28 / 123 * 100 = 22.76 % 24 / 98 * 100 = 24.49 %

EARNING PER SHARE BASIC BASIC 33p 42 P 34.5 P

PRICE EARNING RATIO MP PER SHARE / EPS 600 / 33 = 18.18 times 740 / 42 = 17.62 times 670 / 34.5 = 19.42 times

DIVIDENDS PER SHARE DIVIDENDS / NO OF SHARES 18 p 14 P 13 P

DIVIDEND COVER EPS / DPS 33 / 18 = 1.83 times 42 / 14 = 3 times 34.5 / 13 = 2.65 times

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