MANAGERIAL FINANCE

Managerial Finance

SECTION A - FINANCIAL PERFORMANCE REPORT ON THE GAME GROUP PLC1

Vertical Trend Analysis1

Income Statement1

Balance Sheet2

Horizontal Trend Analysis2

Income Statement2

Balance Sheet3

Financial Ratio Analysis4

Return on Capital Employed (ROCE)4

Return on Assets (ROA)5

Total Assets Turnover (TA T/O)5

Working Capital5

Gross Profit Margin6

Operating Profit Margin6

Acid Test6

Days Inventory Outstanding (DIO)6

Days Sales Outstanding (DSO)7

Days Payable Outstanding (DPO)7

Cash Conversion Cycle (CCC)7

Gearing Ratio7

Narrative Interpretation8

Profitability8

Liquidity8

Efficiency8

Gearing9

Conclusion9

SECTION B - THE DR WILLIAM PALMER (PRIVATE) HOSPITAL10

a)Actual Number of Patient Days10

Total Contribution Margin10

Marginal Cost Comprehensive Statement of Income for FY 201211

b)Break-even Analysis11

c)Analysis of FY 201311

d) Comment on Findings12

SECTION C - CRITICAL ANALYSIS OF DISCLOSING CSR AND ENVIRONMENTAL INFORMATION13

Corporate Social Responsibility (CSR) and Environmental Information13

Reasons and Motivational Drivers to Disclose CSR and Environmental Information14

Impact on Business Performance and Image15

REFERENCES17

APPENDIX20

Appendix A - Vertical Trend Analysis20

Appendix B - Horizontal Trend Analysis23

Appendix C - Tables26

Appendix D - Graphs31

Managerial Finance

Section A - Financial Performance Report on The GAME Group Plc

Vertical Trend Analysis

Vertical trend analysis of The Game Group Plc was conducted over the span of three years 2009-2011.

Income Statement

Analysis of income statement shows a declining trend in the cost of goods sold due to decreasing amount of purchases (Appendix A). It might be possible that the company has changed the inventory recording system by adopting either FIFO or LIFO. During 2010, firm reported 27.80% increase in the gross profit, which was decreased to 26.30% in 2011. Analysis showed that declining business revenue was one of the prime reasons behind reducing level of gross profit. Relative to 2010, firm increased distribution cost and administrative expenses from 19.49% to 22.45%; whereas a decline was observed in the FY 2011 by 23.64%.

In addition to this, 0.91% (2011) increase was observed in exceptional costs relative to 0.35% (2010), which caused significant reduction in the operating business profit. Vertical trend analysis showed decline in the finance income from 0.03% (2010) to 0.02% (2011); whereas finance costs were increased from 0.28% (2010) to 0.35% (2011). Moreover, 0.96% increase was observed in the net profit, which was considerably lower than 3.41% profit increase of FY 2010.



Balance Sheet

Vertical trend analysis of the balance sheet showed mixed trend of total asset value (Appendix A). During FY 2010, non-current assets were increased from 48.27% (2009) to 52.62%. Major increase was observed in the amount of intangible assets i.e. 18.40% to 32.45%; whereas, no change was observed in the deferred tax assets. However, firm reported decline in the non-current assets from 52.62% (2010) to 47.99% (2011). On the other hand, current assets reported increase from 47.38% (2010) to 52.01% (2011). It was made possible due to significant increase in the amount of cash and cash equivalents.

The other side of balance sheet i.e. equity and liabilities posted improvement graph. During 2011, business equity was reduced from 50.59% (2010) to 48.64% due to reduced amount of retained earnings and share premium account. On the other hand, total liabilities increased from 49.41% (2010) to 51.36% (2011) due to increasing level of current liabilities.

Horizontal Trend Analysis

The Game Group Plc's annual statements were horizontally analyzed from ...