Financial Analysis

Topics: Financial ratios, Financial ratio, Generally Accepted Accounting Principles Pages: 17 (5400 words) Published: January 13, 2013
UNIVERSITY OF PORTSMOUTH|
Report for Primark’s IPO purposes|
Financial Analysis Assignment|
|
Student ID: 635281, 636484, 640073|
11/28/2011|

|

-------------------------------------------------
Table of Contents
I.Introduction4
II.Primark’s business and financial situation5
2.1.Primark’s business and financial analysis5
2.1.1.Business analysis5
2.1.2.Financial situation (trend analysis)6
2.2.Industry sector11
2.2.1.Overview11
2.2.2.Cross-sectional analysis12
2.2.3.Summary of Primark’s strength and weakness16
III.Financial ranking and forecast17
3.1.Financial ranking17
3.2.Forecasted 2011 post tax profit18
IV.Corporate Governance Structure20
4.1.Several Essential Principles20
4.2.The composition of the Board20
V.Critical analysis of techniques applied in the analysis22
VI.Conclusion22
Bibliography24
Appendix 1: Ratio Calculations:27
Appendix 2: Primark’s Ratios28
Appendix 3: Financial ratios of four companies in UK retail industry (2010)29
Appendix 4: Ranking listed companies in apparel retail industry in FTSE10030

Summary of Tables
Table 1: Primark's Current Ratio, Quick ratio when include Group Loan9
Table 2: Primark's Current Ratio, Quick ratio when exclude Group Loan9
Table 3: Primark's financial strength & weakness compared to listed competitors16
Table 4: Primark's competitiveness compared to listed competitors16
Table 5: Ranking listed companies in apparel retail industry in FTSE10017
Table 6: Revenue and Post Tax Profit of Primark from 2006 to 201019
Table 7: Critical analysis of techniques applied in the analysis22

Summary of Figures
Figure 1: Primark's Revenue & Adjusted operating profit6
Figure 2: Primark's Profitability Ratios7
Figure 3: Primark's Gearing Ratio & Long Term Debt8
Figure 4: Primark's Efficiency Ratios10
Figure 5: The Total UK Market for Clothing Retailing by Value at Current Prices (£m at rsp), 2006-201011
Figure 6: Share of Expenditure on Clothing and Accessories by Type of Retail Outlet (%), 201012
Figure 7: Profitability ratios of four companies13
Figure 8: Long Term Solvency Ratios of four companies14
Figure 9: Short Term Liquidity ratios of four companies15
Figure 10: Efficiency Ratios of four companies15
Figure 11: Current and Forecast Growth in the Total UK Market for Clothing Retailing by Value at Current Prices (£m at rsp), 2006-201518
Figure 12: Recommended Corporate Governance Structure21

I. Introduction
Primark is a major clothing retailer with 36,000 employees offering “high quality, up-to-minute fashion at value for money prices”. It is subsidiary of Associated British Food plc which is a member of the FTSE100 share price index listed on the London Stock Exchange (LSE). In October 2011, it has 226 stores operating in Ireland, Spain, UK, The Netherlands, Portugal, Germany and Belgium (Associated British Foods plc, 2011). As a junior investment analyst at Bord, Dulle and Witless, this report will provide a fundamental analysis of Primark Stores Ltd in order to inform the IPO pricing. Fundamental analysis helps analyst as well as investors to draw a comprehensive picture of business and financial situation (Ritter & Welch, 2002). Those fundamental signals including company’s current and forecasted performance provides value-relevant information for IPO (Ghicas, Iriotis, Papadaki, & Walker, 2000). In the next section, an overview of Primark and industry sector will be given as well as financial analysis including Trend Analysis and Cross-sectional Analysis, followed by critical appraisal of Primark’s financial situation. The Trend Analysis will provide a review of Primark’s financial situation for the last five year from 2006 to 2010. And the Cross-sectional Analysis will evaluate and compare the company with its rivals and industry’s average. The financial ranking and forecast will be...

Bibliography: Associated British Foods plc. (2010). ABF annual report. Retrieved November 2, 2011, from http://www.abf.co.uk/: http://www.abf.co.uk/uploads/abf-annual-report-2010.pdf
Associated British Foods plc
Birtwistle, G., & Morgan, L. (2009). An investigation of young fashion consumers’disposal habits. International Journal of Consumer Studies 33190/198 , 65.
Bloomberg L.P. (2010). Mataland Retail Ltd. Retrieved November 2, 2011, from Bloomberg.
Bloomberg L.P. (2010). New Look Retail. Retrieved November 2, 2011, from Bloomberg.
Bloomberg L.P. (2010). Next PLC. Retrieved November 2, 2011, from Bloomberg.
Bloomberg L.P. (2010). Primark Stores Ltd. Retrieved November 2, 2011, from Bloomberg.
Bloomberg. (2010). Primark Stores Ltd.
Chesbrough, H
Collins, B., & McKeith, J. (2010). Financial accounting and reporting. London: McGraw-Hill Education.
Coyle, B. (2010). Corporate Governance. London: ICSA Information & Training Ltd.
Elliott, B., & Elliott, J. (2011). Financial accounting and reporting (14th ed.). Essex, England: Pearson Education Limited.
Ghicas, D. C., Iriotis, N., Papadaki, A., & Walker, M. (2000). Fundamental Analysis and the Valuation of IPOs in the Construction Industry. The International Journal of Accounting , 35 (2), 227-241.
Idris, N. F. (2008). Financial Ratios As The Predictor of Corporate Distress in Malaysia. Retrieved November 2, 2011, from University of Malaysia: http://dspace.fsktm.um.edu.my/bitstream/1812/783/1/ResPPrFinalSubmission2nddraft.pdf
Johnson, C
Key Note. (2010). Clothing & Footwear Industry Market Review 2010. Retrieved November 2, 2011, from Key Note Website: http://www.keynote.co.uk/market-intelligence/view/product/2401/clothing-%26-footwear-industry
Key Note
Matalan Retail Ltd. (2011). Matalan - History. Retrieved November 2, 2011, from Matalan Website: http://www.matalan.co.uk/fcp/content/our-history/content
Mc Laney, E., & Atrill, P
Morningstar. (2010). Primark Stores Ltd. Retrieved November 2, 2011, from Hemscott Guru.
Morningstar. (2009). Sector Performance, Apparel Retailers. Retrieved November 2, 2011, from Hemscott Guru: Website:www.hemscott.com/guru/sectors/performance.do?sector=6201&tracker=5371@SEC&name=Apparel-Retailers
New Look Group Ltd
Next Plc. (2011). About Next. Retrieved November 2, 2011, from Next Website: http://www.nextplc.co.uk/about-next.aspx
Primark Stores Ltd
Ritter, J. R., & Welch, I. (2002). A Review of IPO Activity, Pricing, and Allocations. The Journal of Finance , 57 (4), 1795–1828.
The Times 100. (2010). Providing consumers with ethically sourced garments. Retrieved November 2, 2011, from The Times 100 Business Case Studies: www.thetimes100.co.uk/downloads/primark/primark_15_full.pdf
(2010)
Appendix 3: Financial ratios of four companies in UK retail industry (2010)
  | Ratio | Primark Stores Ltd | Matalan Retail Ltd | New Look Group Ltd | Next Plc |
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • General Electric Company Financial Analysis Essay
  • Comparative Analysis Essay
  • conclusion to financial statement Essay
  • Financial Analysis Essay
  • Essay on Financial Analysis
  • Financial Performance Review and Objective Essay
  • Financial Statement Analysis Essay
  • Comparative Analysis of Neepco Through Ratio Analysisgh Ratio Analy Essay

Become a StudyMode Member

Sign Up - It's Free