TOPIC CHOSEN AND ITS TERMS OF REFERENCE
1.1THE BUSINESS AND FINANCIAL PERFORMANCE OF GUINNESS NIGERIA PLC FROM 2006-2008
The financial statement of any enterprise should provide sufficient information to enable individuals assess its profitability, viability and performance in order to enable them make informed economic decisions.
Financial and business analysis is the process of identifying the strength and weaknesses of a firm, both financially and otherwise, by properly establishing relationships between the items on the balance sheet and income statement. This analysis gives room for a better understanding by users of the figures in the financial statements.IASB (2003), asserts that “the financial position of an enterprises is affected by the economic resources that it controls, its financial structure, its liquidity and solvency, and its capacity to adapt to changes in the environment in which it operates”
This research aims to analyse GUINNESS Nigeria Plc from the financial and business angles. It would carry out the analysis in terms of its profitability, liquidity, shareholders’ return and tax efficiency.
1.2GUINNES NIGERIA PLC: A BRIEF BACKGROUND
Guinness Nigeria Plc was incorporated on the 29th of April 1950, it engages in the business of brewing, bottling and marketing of Foreign Extra Stout, Harp Lager, Gordon Sparks, Malta Guinness and Satzenbrau. The Company presently has a technical service agreement with Guinness Overseas Limited.
1.3PURPOSE OF STUDYING THIS TOPIC
During my National Youth Service Corp (NYSC) in 2006/2007, I was posted to Ogun State in the South Western part of Nigeria.
I observed with dismay during my stay that there were so many different types of beer that were brewed by different local companies. I then wondered if GUINNESS one of Nigeria’s leading brewers was really a top notch in the industry because I did not see most of its products.
This observation triggered my choice of studying its performance both financial and otherwise to ascertain its perceived strength, if it was truly an industry leader.
Also, I have taken keen interest in the Nigerian stock exchange in recent times. Guinness Nigeria Plc shares are a toast to many investors. However, most investors’ decisions are based on superficial reviews of records and hearsay. Hence, I decided to look deep into the books of Guinness Nigeria Plc in order to carry out an assessment and make informed and sound decisions.
Furthermore, the turbulence in Nigerian economy over the years ranging from ailing infrastructure to political instability, inconsistency in government policies etc, makes one ponder, the survival series that Guinness Nigeria Plc has been through.
Finally, in the pursuit of my ACCA qualification, financial statement analysis was one key area of the syllabus, and very interesting to me, hence my choice to apply my academic knowledge to this research works.
1.4OBJECTIVES OF THIS REPORT
The main objectives of this research is undertake a thorough analysis of Guinness Nigeria Plc and assess, its profitability, liquidity, tax efficiency and ability to earn returns on shareholder’s investment. In addition, the research would aim to review its corporate governance stance, market share, staff’s productively ratio and generally management’s strength and weakness.
1.5MODUS OPERANDI OF THIS RESEARCH
The approach this research work tends to apply is straight forward and objective-oriented. Extensive reading from the internet and libraries on areas related to the topic would be the initial step. Afterwards, relevant information from the reading would be gathered. This information gathered would then be sorted according to the plan drafted for this research work.
The next step would be to carry out my analysis starting with ratio analysis and then a trend analysis on key highlights in the financial statements. This would suffice for the financial analysis.