Finding financial information.
Summary:
In
this submission, you are asked to conduct a financial analysis of a
listed company, Adidas Group plc, at its financial year-end (27
April
2020).
Task
1: Finding financial information (33 marks)
You
are required to find the appropriate financial information in
Adidas’s financial statements and calculate the following ratios
for the financial years 2018 to 2019, and of 1 of its competitors –
Nike:
1. return
on capital employed
2. return
on sales
3. asset
utilisation ratio
4. gross
profit margin
5. current
ratio and quick ratio
6. gearing
7. interest
cover
8. stock
days
9. current
trade receivables days*
10. current
trade payables days*
11. return
on equity.
Show
all steps needed to calculate your results, including ratio
definition and input values.
Task
2: Financial analysis (67 marks) [no more than 2,000 words]
Conduct
a financial analysis of Adidas using the ratios calculated in Task 1
and the additional financial information provided in the assessment
resources area for Adidas, and Nike (one of Adidas’s main
competitors).
Describe
what you observe about Adidas’s performance as well as the
performance of its competitors. Explain possible causes for
differences in performance and discuss implications for Adidas.
In
your analysis, you should also discuss whether, according to their
financial performance, Adidas should be concerned about Nike.
Your
analysis should not be longer than 2,000 words, excluding
bibliography.
If
you use information that is not included in the financial statements
but elsewhere in the company’s annual report (e.g., notes) or in
external sources, please cite the exact location and source of this
information.
*Note:
it is suggested that you use current trade receivables and current
trade payables to calculate trade receivables days and trade payables
days ratios in annual reports rather than trade and ‘other’
receivables, and trade and ‘other’ payables to be able to compare
like with like.
This
assessment is not just testing your ability to calculate the
different ratios; it is also assessing your understanding of how to
source relevant financial information and make considered decisions
about whether and how to deploy it. This is reflected in the
following allocation of marks for this question:
· 33
marks for the calculations
· 57
marks for the analysis of the financial performance of Adidas, and
Nike
· 10
marks to discuss whether Adidas should be concerned about Nike.
Remember
to show all your calculations in detail. Tables should be included
within the body of the analysis. We recommend you also submit a
spreadsheet showing your calculations, as this will help your tutor
to give feedback on your calculations.
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