Financial Statement Analysis Finsbury vs Cranswicks
Introduction
Investment in securities has become a popular business activity that not only brings return to investors, but also provides a large amount of capital for corporations. However, which company should be invested in might be a controversial issue for each investor. Thanks to the information found in a company’s financial report, most people take interest in evaluating the past and current performance as well as financial position of an entity in order to form expectations about firm’s operations in the future. Annually, a company publishes several financial statements such as Income statement, Balance sheet, Cash flow statement which each presents different aspects about its business. An examination of these reports can provide to analysts an assessment of company’s profitability, ability to generate positive cash flows to pay debts as they fall due and dividend prospects (CFA Institute, Volume 3, 2012).
Base on published annual financial reports of Finsbury Food Group PLC and Cranswick PLC during the period from 2011 to 2012, the objective of this essay is to determine how users can make economic decisions by analysing these documents. Finsbury is the second largest manufacturer of Ambient Packaged Cake (excluding In Store Bakery) in the UK. It has been listed to trading on Stock exchange since 23 Feb 2007. Cranswick went on to the Stock market in 1985 and since that time has evolved into a business that is highly focused on the food sector with a wide range of tasting products. As required by the AIM rules of the London Stock Exchange, financial statements of both companies are prepared and approved by Directors in accordance with International Financial Reporting Standards (IFRSs).
This paper starts with calculating, interpreting and evaluating some main indexes in four sectors: profitability, liquidity, gearing as well as shareholder interests. It will go on to compare two firms’ situations. As a consequence, investment decisions would be made.
Investment in securities has become a popular business activity that not only brings return to investors, but also provides a large amount of capital for corporations. However, which company should be invested in might be a controversial issue for each investor. Thanks to the information found in a company’s financial report, most people take interest in evaluating the past and current performance as well as financial position of an entity in order to form expectations about firm’s operations in the future. Annually, a company publishes several financial statements such as Income statement, Balance sheet, Cash flow statement which each presents different aspects about its business. An examination of these reports can provide to analysts an assessment of company’s profitability, ability to generate positive cash flows to pay debts as they fall due and dividend prospects (CFA Institute, Volume 3, 2012).
Base on published annual financial reports of Finsbury Food Group PLC and Cranswick PLC during the period from 2011 to 2012, the objective of this essay is to determine how users can make economic decisions by analysing these documents. Finsbury is the second largest manufacturer of Ambient Packaged Cake (excluding In Store Bakery) in the UK. It has been listed to trading on Stock exchange since 23 Feb 2007. Cranswick went on to the Stock market in 1985 and since that time has evolved into a business that is highly focused on the food sector with a wide range of tasting products. As required by the AIM rules of the London Stock Exchange, financial statements of both companies are prepared and approved by Directors in accordance with International Financial Reporting Standards (IFRSs).
This paper starts with calculating, interpreting and evaluating some main indexes in four sectors: profitability, liquidity, gearing as well as shareholder interests. It will go on to compare two firms’ situations. As a consequence, investment decisions would be made.
Bibliography: 1. McKenzie (2009) The financial times guide to using and interpreting company accounts, Great Britain: Pearson Education Limited 2 3. CFA Institute (2012) Level I 2012 Volume 3 Financial Reporting and Analysis, 7th edition 4