Financial Analysis Interserve

Topics: Generally Accepted Accounting Principles, Balance sheet, Financial ratios Pages: 32 (6779 words) Published: February 19, 2013
2.Industry Background2
3.Company Information2
3.1 Geographic (Operating Profit contribution)2
3.2 Major Stakeholder and Management and Governance4
4. Objectives5
5.Measurement and Performance5
6.Financial Ratio Analysis6
6.1 Liquidity Ratios and Short-Term Debt-Paying Ability6
6.2 Long-term Debt Ratio8
6.3 Profitability Ratios9
6.4 Investor Analysis Ratios10
7.Trend Analysis11
7.1 Horizontal Analysis11
7.1.1 Income Statement Horizontal Analysis11
7.1.2 Balance Sheet Horizontal Analysis14
7.2 Vertical Analysis16
7.2.1 Vertical Income Statement Analysis16
7.2.2 Vertical Balance sheet Analysis18
9.1 Interserve FinSaS input23
9.2 Interserve Ratios25
9.3 Kiers FinSaS Input27
9.4 Kiers FinSaS Ratio29
9.5 Kiers FinSaS Vertical Analysis30
9.6 Kiers FinSaS Horizintal Analysis33

This is an analytical procedures’ report of Interserve plc. to evaluate the company’s performance using its last four financial statements. The report is used in planning to understand the client’s business and industry. It compares clients’ ratio to industry or competitors benchmarks to provide an indication of the companies performance. Also, it is used throughout the audit to identify possible misstatements, reduce detailed tests, and to assess going-concern issues (Michael, 2011). 2.Industry and Environment

The purpose of analyzing the business and industrial environment of Interserve’ Plc. is to assess the risk related to the industry (Support Service Industry). The support service industry is made up of many firms whose sole purpose is to deliver services to the consumer market. Using heavy machineries and hi-technologies.

Table 2.1: Common risks faced by industries

Specific Risks|
1. Treasury management risk|
2. Principal risk and uncertainties|
3. Key People|
4. Macroeconomic environment|
5. Competition|
6. Technology|
7. Operating system|
8. Health And Safety Regime|
9. Major Contracts|
3.Company Information
Interserve is one of the world’s foremost support services and construction companies, operating in the public and private sectors in the UK and internationally. We offer advice, design, construction, equipment and facilities management services for society's infrastructure. Interserve is based in the UK and is in the FTSE 250 index. It has revenue of £1.9 billion and a workforce of nearly 50,000 people worldwide. (Interseve PLC, 2012). The operating profit by each location in 2011 is shown in fig 3.1 and fig 3.2 shows operating profit and gross revenue contribution by each sector of the company 3.1 Geographic (Operating Profit contribution)

Fig. 3.1.1
3.2 Segmental Contributions

Fig. 3.1.2
3.2 Major Stakeholder and Management and Governance

4. Objectives

Fig 4.1
5.Measurement and Performance
In order to measure Interserve’s performance a financial analysis of the company’s last four financial statement has been computed using FinSaS. The analysis is divided into: Financial Ratio Analysis:

* Liquidity Ratios
* Profitability Ratios
* Long term Debt Ratios
* Investors Ratios
Trend Analysis
* Vertical analysis
* Horizontal analysis
6.Financial Ratio Analysis
According to (Cox, M and Fardon, D 2008), “Ratio analysis is the technique of interpreting the financial statements of businesses in order to assess strengths and weaknesses”. The ratio would be compared to that of an industry competitor (Kiers Group). Financial ratio analysis compared to an industry competitor is important, however, an analysis of its trend is just as important. This is further analyzed in the trend analysis (vertical and horizontal) 6.1 Liquidity Ratios and Short-Term Debt-Paying Ability

Ratio| Calculation| Interserve 2011| Kiers 2011|
Accounts Receivables Turnover| Net...
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