Stagecoach Financial Assessment
2012
Financial Analysis on future investment in
Stagecoach Plc.
Denisse Varilla, Ha Nguyen, Jasmin Atwal, Sui Fong Shum
University of Greenwich
2/14/2012
Contents
Text
Executive Summary
2
Introduction
2
Method
2
Findings
3
Growth
3
Profitability
3
Liquidity
3
Efficiency
4
Borrowing
5
Investors Ratios
5
Conclusions
6
Recommendations
6
Bibliography
7
Tables and Diagrams
Appendices
Appendix 1
Ratios
8
Calculations
9
Appendix 2
-1-
11
Executive Summary:
This report investigates Stagecoach Plc. on the following aspects; profitability, liquidity, efficiency, borrowing and investor ratios of Stagecoach Plc. Methods of analysis …show more content…
-3-
Moreover the acid test is very similar to the current ratio, with no difference in 2009 and less than 0.05 differences in the following two years (Table 4-5, Graph 3). This is consistent with the nature of the company being that they are a transport company and so does not require inventory. Therefore when comparing the total assets with total liabilities which would include the core of the company (the fixed assets)
(Graph 1)
, it is obvious that total assets are increasing year on
year over the past three years with the ratio being 1.16: 1 in 2011
(Table 6)
. This could signify
further growth over the upcoming years.
Efficiency:
To measure the efficiency of Stagecoach, the fixed assets turnover ratio and the debtors days ratio is calculated. Due to Stagecoach being a transport service, relying heavily on its fixed assets, the ratio is calculated to demonstrate the proportion of how much the fixed assets contribute to the company’s final revenue. The debtor days show a steady reliable trend.
This provides the company with an alternative route for receiving money and allows them to pay their own creditors …show more content…
with only 0.20.3p differences between the basic and diluted amount. This positively impacts the shareholders as the dividends are not affected excessively by being diluted. There was a slight decrease in 2010 but recovered well in 2011 surpassing the previous EPS in 2009 by
31.6%. The adverse impact on 2010 is perhaps because of the severe weather in the early quarter of the year. The recovery in 2011 was actually predicted by the company as they have anticipated reduction in fuel costs, as well as receiving more revenue support from
SouthWestern Trains. Other methods to increase EPS used by Stagecoach is the acquisition of other companies evidenced by the purchase of East London Bus business in late 2010.
The dividends per share ratio showed the security of dividend payouts in the years 2009 and
2011. However there was no dividend payout in 2010 possibly due to a negative balance in retained earnings. On the other hand, year 2011 surpass the DPS in 2009, which shows that the company is performing well financially and will meet the needs of the shareholders as their dividend is guaranteed.
-5-
Conclusion:
In conclusion, Stagecoach Plc. is continuously growing and expanding with the intentions
Financial Analysis on future investment in
Stagecoach Plc.
Denisse Varilla, Ha Nguyen, Jasmin Atwal, Sui Fong Shum
University of Greenwich
2/14/2012
Contents
Text
Executive Summary
2
Introduction
2
Method
2
Findings
3
Growth
3
Profitability
3
Liquidity
3
Efficiency
4
Borrowing
5
Investors Ratios
5
Conclusions
6
Recommendations
6
Bibliography
7
Tables and Diagrams
Appendices
Appendix 1
Ratios
8
Calculations
9
Appendix 2
-1-
11
Executive Summary:
This report investigates Stagecoach Plc. on the following aspects; profitability, liquidity, efficiency, borrowing and investor ratios of Stagecoach Plc. Methods of analysis …show more content…
-3-
Moreover the acid test is very similar to the current ratio, with no difference in 2009 and less than 0.05 differences in the following two years (Table 4-5, Graph 3). This is consistent with the nature of the company being that they are a transport company and so does not require inventory. Therefore when comparing the total assets with total liabilities which would include the core of the company (the fixed assets)
(Graph 1)
, it is obvious that total assets are increasing year on
year over the past three years with the ratio being 1.16: 1 in 2011
(Table 6)
. This could signify
further growth over the upcoming years.
Efficiency:
To measure the efficiency of Stagecoach, the fixed assets turnover ratio and the debtors days ratio is calculated. Due to Stagecoach being a transport service, relying heavily on its fixed assets, the ratio is calculated to demonstrate the proportion of how much the fixed assets contribute to the company’s final revenue. The debtor days show a steady reliable trend.
This provides the company with an alternative route for receiving money and allows them to pay their own creditors …show more content…
with only 0.20.3p differences between the basic and diluted amount. This positively impacts the shareholders as the dividends are not affected excessively by being diluted. There was a slight decrease in 2010 but recovered well in 2011 surpassing the previous EPS in 2009 by
31.6%. The adverse impact on 2010 is perhaps because of the severe weather in the early quarter of the year. The recovery in 2011 was actually predicted by the company as they have anticipated reduction in fuel costs, as well as receiving more revenue support from
SouthWestern Trains. Other methods to increase EPS used by Stagecoach is the acquisition of other companies evidenced by the purchase of East London Bus business in late 2010.
The dividends per share ratio showed the security of dividend payouts in the years 2009 and
2011. However there was no dividend payout in 2010 possibly due to a negative balance in retained earnings. On the other hand, year 2011 surpass the DPS in 2009, which shows that the company is performing well financially and will meet the needs of the shareholders as their dividend is guaranteed.
-5-
Conclusion:
In conclusion, Stagecoach Plc. is continuously growing and expanding with the intentions