Analysis Of Smithson Plc

FINANCIAL MANAGEMENT AND CONTROL

NAME – SIDDHARTH SHAH
ASSIGNMENT CODE – PGBM01
BATCH CODE – MBSD51403A
FIN NUMBER – G1389457X
TUTOR – MANEK MUKESH

TABLE OF CONTENTS
1.0 Smithson plc ………………..…………..……………………………………….. pg 03
1.1 Profitability ratio…………………………..……………………………….……. pg 03
1.2 Liquidity ratio……………………………………………………………………..pg 03
1.3 Efficiency ratio……………………………………………………………………pg 04
1.4 Gearing ratio………………………………………………………………………pg 05
2. Report to the board of Smithson plc………………………………..……………... pg 06
3. Working capital Cycle for Smithson Plc……………………………….………... pg 07
4. Investment Appraisal Tecniques……………………………………….…………. pg 08
5. Benefits and Limitations of Investment Appraisal tecniques………………...…… pg 10
6. The main sources of finance………………………………………………………. pg 13
7. Analysis on Assumptions of Break-even .……………………………….………. pg 16
8. Bibliography………………………………………………………………………. pg 17

PART A
1.) SMITHSON PLC
Computation of varios ratios for interpretation :
i.) Profitability Ratios:
Gross Profit Ratio:

Formula 2012 2013
Gross profit ×100 Sales 7300 ×100
12500

= 58.40% 7045 ×100
13850

= 50.87%

Profit before interest and tax (PBIT):
Formula 2012 2013
PBIT ×100
Sales

So this facility depends on the relationship of the business with the banker. Reasonable amount of interest is been charged on the over drawn amount and is on daily basis. But in this overdraft business the banker has the right of claiming the overdraft amount from the business whenever required. This arrangement is economical for the business as the interest is charged on a daily basis unlike other options such as term loans as the interest is fixed over a period. Once cash and cheques are deposited n the account, automatically the overdraft amount would decease and interest would be charged on the lesser