Financial Management

Topics: Financial ratios, Generally Accepted Accounting Principles, Dividend yield Pages: 13 (4189 words) Published: May 2, 2013
Executive Summary
The purpose of this assignment is to analyze the financial position of John Keells Holdings PLC. The author has consisted only JKH PLC along and not its subsidiaries (group). The author has made use eleven ratios to analyze the financial position of the company. The ratios that he has used are Return on Investment (ROI), Return to shareholders, Return on Capital Employed (ROCE), Earnings per share (EPS), Price-Earnings Ratio (P/E), Dividend yield, Dividend payout, Gearing ratio, Interest cover, Current ratio and Acid test ratio. The author was not able to use the gross profit ratio, net profit ratio and working capital turnover because since only JKH PLC is considered and not its subsidiaries, the total sales figure obtained is incorrect to be used in this ratio. To obtain the actual net profit ratio, net profit ratio and working capital then the entire group should be considered. The author was not able to use the Debtors collection period and Creditors collection period because JKH being a holdings company does not have any purchases. Also all its debtors are its subsidiaries and cannot be used to calculated the collection period.

Table of Contents
About the company2
Models / Content2
Return on Investment5
Return on Capital Employed6
Earnings per share6
Price-Earnings Ratio6
Dividend Yield7
Dividend Payout7
Gearing Ratio8
Interest Cover8
Current ratio8
Acid Test ratio9
Analysis and Evaluation10
Capital Structure14
Risk Management22
Share Information23
Balance Sheet26
Income Statement27
Number of Shares28

About the company
John Keells Holdings PLC is a holding company. It is a Sri Lanka-based conglomerate, with business interests in property, leisure, transportation, consumer foods and retail, financial services, information technology (IT) and related services. In Sri Lanka, it is a cargo and logistics service providers and also owns seven resort hotels in Sri Lanka and four in the Maldives under its two brands, Cinnamon Hotels and Resorts and Chaaya Hotels and Resorts. It also owns two consumer brands, Keells and Elephant, which produce and market carbonated soft drinks, ice cream and processed meats in Sri Lanka. It also consist companies engaged in software development and providing IT solutions for overseas clients. In terms of market capitalization, John Keells Holdings PLC is the largest company which has accounts for more than 14% of the Sri Lankan Stock market. Being a large organization, it is very important to analyze the performance of the company.

Models / Content
The author has made use of ratio analysis to evaluate relationships among financial statement items. The author has made use of the accounting ratios to identify the trend of the company for the past two year, i.e., 2010 and 2011. Using the ratios, the author focuses on the profitability, efficiency, investment, capital structure and liquidity of the company. John Keells Holdings PLC’s vision is to build businesses that are leaders in the region. JKH consists of 9,639 stakeholders, out of which 68.3% of the shares in issue were held by the public, while 6.0% of the shares were held by the directors, executives and connected parties, and the balance 25.7% by the shareholders holding more than 10%. Board of Directors and the Employees are two key stakeholders of JKH. The Board of Directors is accountable to the shareholders for the governance of the company. They have the power to provide direction and guidance in medium and long term strategies, approving annual budgets, appointing and reviewing the performance of the chairman, reviewing HR processes, overseeing the risk management process and etc… At JKH, employees are consisted as its greatest asset. They have an open door policy where the employees can directly mail the chairman regarding their...
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