AVIVA

Company Analysis: Aviva

Executive Summary

This report consists of two parts: part 1 covers the financial analysis of Aviva and part two comprises of the ABC system critiques. Aviva plc (Aviva) is one of the most successful insurance groups and also the largest insurance service provider in Great Britain. It offers several products and services relevant to life assurance and long term saving business, funds management, and health as well as general insurance business. The company is headquartered in London and operates in several other states including Asia Pacific, North America, and Europe. The financial performance of the company in the year 2011 has been inefficient as compared to its performance in the previous year, which is mainly because of the deteriorating net revenues in 2011 than 2010. The ratio analysis of the company has shown that the profitability and operating efficiency of the company declined in 2011 as compared to previous year. However, the P/E ratio suggests that investors are still willing to pay more on per dollar of current earnings. As far as ABC costing is concerned, this system has gained huge significance since last few years and many organizations have adopted and implemented this approach due to several advantages associated with it. ABC system offers more reliable and accurate data regarding costing as compared to traditional costing system, and therefore organizations of various industries are willing to use it in their decision making and evaluation of performance. Further, by implementing activity based costing system, firms can define and measure their costs and performances of objects, resources, and activities directly. Hence, it allows the examination of a financial and operational data of the firm and enables the analysis and management of performance metrics.

Company Background1

Financial Analysis of Aviva Based on Financial Ratios1

Profitability Ratios2

Net Profit Margin2

Return On Equity (ROE)3

Return on Assets (ROA)4

Efficiency Ratios4

Total Assets Turnover5

Fixed Assets Turnover6

Stock Valuation Ratios7

Earnings per Share7

Price to Earnings Ratio7

Debt Ratio8

Debt to Equity8

Overall Financial Analysis9

Critique of the Rise of ABC10

ABC Costing versus Traditional Absorption Costing10

Arguments by the Supporters of ABC and the Extent to which ABC has taken by the Insurance Industry12

Impact of ABC13

Conclusion15

References17

Appendix21

Company Analysis: Aviva

Company Background

Aviva plc (Aviva) is one of the leading and largest insurance groups and also the chief indemnity service supplier in the United Kingdom. Aviva offers services and products associated with life assurance and long term saving, funds management, and health as well as general insurance business. Besides these, the group also makes investments in properties, securities, mortgages, and loans, and in activities related to trading of property through its associates as well as subsidiaries. There are six business segments of Aviva through which it conducts its business operations including United Kingdom, which is mixture of both UK General Insurance and UK Life segments. Where, Europe is split into European business and Delta Lloyd, North America, and Aviva Investors. Headquarter of the firm is in London (UK), where it functions across the Europe, North America, and Asia Pacific. Aviva serves approximately 43 million consumers with its key ...