To complete Part 1, you must obtain the full annual reports (not interim reports) of a listed company. It is recommended to choose a company from the manufacturing or retail sectors, while avoiding banks, investment firms (such as investment trusts and pension funds), and financial services companies. The reports can usually be downloaded in PDF format from the company’s website.

To analyse the chosen company, you should select another company of similar size and turnover within the same sector to serve as a comparator for the results you have calculated.

Use consolidated figures where applicable, as these represent the entire group of companies, not just the individual parent company. You should aim to calculate several ratios in each category over a period of at least three years.

Report length- Max 2,000 words excluding appendices, including everything such as headings, in-text references and in-text tables and figures from the start of your introduction to the end of your conclusion.

As a guide I have provided some ideas on writing the report. These are suggestions but are not prescriptive.

WRITING REPORTS – Part A

You may not have prepared a ‘professional’ style report before, so here are a few pointers. The report should contain the following:

Title page (title of report, date, possibly the author)
Contents page (headings of the following sections, with page references)
Executive summary (brief summary of scope of report and main findings, imagine you are writing for a busy chief executive so make it no more than 200 words). The executive summary is NOT included in word count.
Introduction (could contain background information on the company analyzed, and anything that you think is relevant to an understanding of the analysis e.g. the company makes copper cables and the price of copper has risen dramatically recently)
Several separate sections for e.g. overview of financial performance and position (e.g. the company’s profits have grown at a rate of 5% over the past 5 years but the company has been losing cash, 50% of sales are made in Europe, etc.), discussion of profitability, efficiency, etc. ratios. Refer to calculated ratio figures where appropriate, BUT DO NOT INCLUDE ACTUAL CALCULATIONS HERE.
Conclusion (of main findings – do NOT put anything new in your conclusion)
References
Appendices (containing your ratio – and any other – calculations)

You should aim to calculate a couple of ratios in each category, but you need not be limited to this. ALWAYS CALCULATE RATIOS FOR at least 3 years to get a trend – it is important to be able to compare ratios against something.

Please use sources like the Financial Times, journal articles, government and industry reports or the internet should be used to find out background information on the company.

Make sure you have a good read of the whole set of financial statements including the directors’ reports which often gives you useful background information.

Citations and references should be provided using the Harvard style. Charts, figures and other media may all be used wherever appropriate.

Based on past experience I have put a list of FAQs here:

FAQs

Q1: What do you want me to do?

A1: Choose a company and, applying some of the techniques we have covered, give your opinion on the financial health of the company. What I want are your opinions supported by some evidence using some analytical techniques.

Q2: I am comparing 2 companies and they have different year end dates – does this matter?

A2: No. Year end dates vary so it is unlikely that you will find a comparator company with a similar year end date. If there are a few months difference it does not matter – this is just an exercise.

Q3: Is there a “right answer” for an analysis?

A3: No. I’m looking for your ideas and how you review how the company is doing. You might care to suggest an opinion on how the company might do in the future, but this is not strictly required.

Q4: Are there any companies I should avoid?

A4: Stay away from banks, investment companies (investment trusts & pension funds) and financial services companies. Their rules vary somewhat and can be difficult to call.

Q5: Can I go over the word limit?

A5: No.

Q6: I can’t find a comparator company that does exactly what my chosen company does – what can I do?A6: Choose a company in the same industry sector. You won’t find companies that do exactly the same thing. The companies in the same sector will be pretty varied but this is a “broad brush” activity

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