FINANCIAL ANALYSIS

Financial Analysis of Coppice plc



Financial Analysis of Coppice plc

Introduction

This paper focuses on the financial status of Coppice plc for 3 years that are from 2009 to 2011. This study will describe the importance of choosing the right strategy. Internal and external analysis of Coppice plc is made in order that Manchester Money Universal plc (MMU) makes the investment decision. It includes the model of the strategy in use. The strategic choice of Coppice plc makes the company a leader in the industry. Coppice plc (Coppice) is a small hotel chain with a number of stores in the United Kingdom. Coppice plc specializes in city centre low cost hotels. Its advertising slogan is “No frills, nice bills”. The company has become an example in the strategic management because of its successful implementation of the strategy. Internal and external analysis of Coppice plc shows the set of managerial decisions and actions that determine the long-run performance of a corporation. It includes environmental scanning, strategy formulation, strategy implementation and evaluation and control.

Background

The financial performance of Coppice plc shows that the major portion of the company's assets is not comprised of liabilities; which is not a good indication for the company as the company's short term and the long-term debts are increasing. In addition to this, the company's equity seems good or satisfactory, which is high as compare to the liabilities which shows that the company can meet its financial obligations that is liabilities is some sort of financial loss occur. In addition to this, past studies states that the financial analysis are to determine whether there are liquidity problems, the study of profitability determines the evolution of the company and return on invested capital, management and analysis of related variables involved in the short-term financing, obtaining rotations and time of collection and payment means.

Key Financials

(As of 2011)

Income Statement

£m

Revenue

354

Net Income

66

Balance Sheet

Total Assets

1111

Total Liabilities

387

Shareholders' Equity

724

Cash Flows

Cash from Operations

211

Cash from Investing

-30

Cash from Financing

-182

Ratios (For calculation see Appendix)

As it is known that the most important factors in the well being of a business, is to see that it operates at a profit and to organize it in order to be able to meet its liabilities at appropriate times. If either of these points is not covered efficiently it could mean that the business might have to be closed down. This is the reason why we choose to calculate profitability and liquidity ratios which are the most important and reliable guides. In addition, various past studies states that we decide to calculate activity ratios in order to see how efficiently the company like Coppice plc has managed its debt management ratios, asset management ratios and per share values to commend upon the Coppice plc's sources of finance and whether a risk arises from increased debt.

Profitability Ratios

2009

2010

2011

ROA % (Net)

6 %

7 %

6 %

ROE % (Net)

10 %

13 %

9 %

ROI % (Operating)

61 %

76 %

63 %

EBITDA Margin %

31 %

34 %

29 %

Liquidity Ratios

2009

2010

2011

Quick Ratio

0.327868852

0.248447205

0.280254777

Current Ratio

0.344262295

0.260869565

0.292993631

Net Current Assets % TA

0.04109589

0.035532995

0.04140414

Debt Management

2009

2010

2011

LT Debt to Equity

0.5

0.544629349

0.317679558

Total Debt to ...