Ratio Analysis for Building Company

Ratio Analysis for Building Company Title: Ratio analysis for Bellway Company About Bellway plc The Bellway Group is one of the largest housebuilders in the U.K. It was established in 1946 by John T.Bells and his two sons[1].The Group’s operations are spread throughout the country. The key activities of the Group include: land acquisition, finance, planning, architecture, design, build management, marketing and customer service. Bellway builds low-cost homes and apartment blocks on disused or abandoned sites. Position and Strategy Bellway sells around 6,000 houses every year and has till date provided more than 100,000 homes. The houses are designed, built and marketed by local teams operating from regional offices. These offices are managed and staffed by local people. The company employs about 2,000 people with varying expertise. Corporate Social Responsibility The Group has adopted five principles in their day-to-day operations to minimise the environmental effects of the building process and create sustainable communities: â€Å"Protection of the environment Prudent use of natural resources Creating environments that have the potential to add to economic growth and employment opportunities Social considerations that recognise the needs for a changing and advancing population The creation of communities that will endure and where people will aspire to live† Source: Bellway p.l.c. Annual Report Accounts 2007 The Group reports on these five principles in its Annual Report. Performance Overview of Bellway Group The housing industry has been facing challenging market conditions since the last few months. However the Chairman of the Group has made the following statement in the Annual Report of the Group for the year ended 31 July 2007. â€Å"Bellway has, yet again, produced a very good set of results for the year ended 31 July. The Group continues to deliver organic growth in volumes and earnings despite the challenging market conditions experienced by the housing industry over the last twelve months.† The present paper attempts to examine the reality of the statement by doing a ratio analysis to assess the financial health of the Group based on its Annual Reports for the year ended 31 July 2007. Performance Overview The key highlights of performance in the year ended July 2007 over the previous year are given in the table[2] below: In the next section a detailed analysis of the financial performance and health of the Group has been examined on the basis of: Performance Ratios Working Capital Efficiency Ratios Investment Ratios Financial Status Ratios PERFORMANCE RATIOS Return on capital employed (ROCE) Profit before Tax and Interest Payable = x 100 Total Assets less Current Liabilities * This is taken as equal to operating profit plus interest income The ROCE of the Group is around 22% in the year ended 2007. Despite a 6.5% increase in the Profit before Tax and Interest Payable in 2007, the ROCE stands at the same figure as in 2006. This only indicates that the net assets have also increased in the same proportion as profits. However, there has been no improvement in the efficiency in employing theses net assets to generate profits. Moreover, ROCE for the Group is lower than five year average ROCE achieved by builders over UK which stands at 25–30%[3]. Thus, the efficiency in employing net assets to generate profits for the Group is lower than the Industry average. Asset turnover Sales Turnover = Total Assets less Current Liabilities The asset turnover ratio of 1.165 indicates that a sale of  £1.165 is generated from each  £ invested in assets by the Group. This ratio has increased by around 3.6% in 2007 over 2006 which is a good sign. The increase is primarily due to an increase in total assets and also a corresponding increase in the sales turnover. Net profit margin Profit before Tax and Interest Payable = x 100 Sales turnover *This is taken as equal to operating profit plus interest income Despite the increase in profit before interest and taxes and also sales turnover, there is a slight decline in the net profit margin from 19.5% in the year ended 2006 to 19.1% in the year ended 2007. The decline indicates that proportionate increase in cost of operations has been higher than the increase in sales. Thus, there has been a decline in the efficiency of sales to generate profits. Gross profit margin Gross Profit = x 100 Sales turnover There has been a decrease in the gross profit margin of the Group by 0.6% despite the increase in sales revenue. The decline in the gross profit margin has been due to a larger increase in cost of sales as compared to corresponding increase in sales. Sales revenue has increased by 9.2% over 2006. The corresponding increase in cost of sales has been 9.9%. The decline in the gross profit margin also explains to certain extent the decline in net profit margin. WORKING CAPITAL EFFICIENCY RATIOS Inventories (or stock) turnover Stocks and Work in Progress = x 365 Purchases (or Cost of Sales) The housebuilding industry by its very nature has slow moving stock / inventory. In 2007, as compared to 2006, there has been a decline in the number of days the stock takes to be converted into sales. The stock is getting converted into sales in 538.65 days in 2007 as compared to 552.16 days. This is an improvement of around 2.4% over 2006. Trade receivables (or trade debtors) turnover Trade Debtors = x 365 Sales Turnover * All sales are assumed to be on credit Though it takes less than 1 week to collect receivables, the increase in the time taken to receive payments from customers must be examined carefully before it gets out of hands. An increasing ratio also indicates that the company is taking more time for collecting its payments. Thus, each  £1 of its sales revenue stays tied up in trade receivables for a longer period. Trade payables (or trade creditors) turnover Trade Creditors = x 365 Cost of Sales ** All purchases are assumed to be on credit There has been a decline in the average settlement period for trade creditors by almost 17%. This is not a good sign as trade credit is a type of free finance available to a company. A declining ratio indicates that suppliers in the year ended 2007 gave a lower credit period to the Group as compared to the previous year. This becomes a bigger cause of concern as the Stock Turnover ratio for the Group stands at a high figure. It may also have adverse implications for the Group’s liquidity position. INVESTMENT RATIOS Earnings per share (EPS) Profit before Ordinary Dividend = No. of Ordinary Shares in issue EPS reflects upon share performance. Thus EPS trend of the Group highlights the investment potential of its shares. It also highlights the possibility that the company will pay a dividend[8]. There has been a 6.2% growth in the diluted EPS of the Group in the year ended 2007 as compared to 2006. This indicates that the potential of the shares of the Group is growing. This increase in EPS is primarily due to an increase in the profits with no corresponding increase in tax rates. Price earnings ratio(PE) Market Value per Share = Earning per share In general, if the PE ratio of a company is high it implies that investors are optimistic about the company’s future and are expectinghigher earningsgrowthin the future compared to companies with alower PE. However, the ratio can only be interpreted appropriately when compared to historical PE ratio or industry benchmarks. Group’s historical PE ratio The PE ratio for the Group has been constant over the previous two years. The ratio needs to be examined in light of the deteriorating industry scenario over the last two months. The PE ratio calculated above may not hold true today and would have declined substantially. This is because housebuilding is a cyclical business where earnings fall exponentially as sales prices decline. Recent times have seen a substantial decline in sale prices. If the PE is calculated at the share price of 713.5p[9] as on 25 April 2008, assuming earnings to be constant at 31 July 2007 level, it will be only 4.9. Thus, actual PE will be lower. Industry average The following diagram[10] highlights the PE ratios of 8 leading housebuilders in UK as on 21 July 2007. The diagram clearly indicates that Bellway is towards the lower end of the selected companies in the industry UK with regard to its PE ratio Dividend yield Latest Annual Dividends = x 100 Current market share price The dividend yield at the current price as on 25 April 2008 = (43.125 / 713.5) % = 6% However, the market price of shares for the Group is much lower than it was a year ago. Historically, the dividend yield has been as indicated in the table below: Dividend cover Profit on ordinary activities after taxation = Ordinary Dividend The dividend cover has fallen despite the fact that the profits have increased. A declining trend makes dividend less secure. However it is not a cause of concern for the Group as the dividend cover is much better than many other companies in the industry. For example, housebuilder Persimmon has cover of 2.69[11]. Thus, if the Group has a cover of more than 3, it could maintain its payout more than thrice over. Return on equity (ROE) Profit on ordinary activities after taxation = x 100 Equity shareholders’ funds The Group shows a decline in this ratio in 2007 over 2006. The decline may be primarily due to increase in equity shareholders’ funds. FINANCIAL STATUS RATIOS Working capital ratio (WCR) Current Assets = Current liabilities The accepted norm for the WCR ratio is that current assets should be double the current liabilities. However, the norm varies with industry. In the case of the Group the ratio has declined but it is higher than the accepted norm. However, a closer analysis indicates that the Group faces a liquidity crisis. A close examination of the current assets indicates that inventories constitute more than 95% of the current assets. This, added to a high stock turnover ratio, will not let the Group meet its current obligations. A clearer picture of the liquidity is provided by the Quick Asset ratio. Quick assets ratio (QAR) Current Assets Stocks = Current liabilities The norm for this ratio is 1: 1. However, it again varies from business to business. The ratio is far below the norm. In other words, the Group has no way of covering up its current obligations. This is a cause of concern and can lead to survival problems also if the condition persists. Gearing Long-term Debt + Preference Shares = Total Assets less Current Liabilities *These include preference shares of  £20,000,000 in both the years The gearing or dependence on debt has decreased by about 7% for the Group. Thus, there has been a decline in the Group’s risk as lesser amount is committed for periodic interest and repayment commitments. This is especially welcome in the time of deteriorating housing market conditions. Interest cover Profit before Tax and Interest Payable = Interest payable Despite the decline in gearing, the Group’s interest cover for the year ended 31 July 2007 also shows a slight decline. The decrease in interest cover from last year is due to a higher increase in net interest payable than increase in profit before tax and interest. Conclusion: To conclude it can be said that Bellway has performed well in the year ended July 2007 over 2006 in terms of profitability as well as increased sales. However, it faces a major short-term liquidity crisis. This is a cause of concern as the UKs housebuilding industry, in general, is expected to be facing more difficult times ahead due to credit crunch and declining consumer demand. References: Atrill Peter McLaney Eddie, Financial Accounting for Decision Makers, 5th ed. 2008 , FT Prentice Hall Barker Review Interim Report, The Housebuilding Industry, accessed from http://www.hm-treasury.gov.uk/media/2/9/barkerreview_interim_chapters4to6.pdf Bellway p.l.c. Annual Report Accounts 2007 Elliott B. and J. Elliott, Financial Accounting and Reporting, 11th ed. 2007, FT Prentice Hall HIFIC Barnard Report, Future Trends in Timber Construction and Implications for HIE Region, accessed from www.forestryscotland.com/pages/download2.asp?file=attachments/HIFIC_Forres%2007_Barnard.pdf Steed, Alison, Five ‘safe’ shares for hard times, The Sunday Times 20 April, 2008 Team Limited, The Cartel- Like Industry, accessed from http://www.teamlimited.co.uk/Assets/pdf/Building-Barriers.pdf Yahoo finance, accessed from http://finance.yahoo.com/q/pr?s=BWY.L Hemscott website accessed from www.hemscott.com Brief: 209439Page 1 of 13 [1] Source: http://finance.yahoo.com/q/pr?s=BWY.L [2] Source: Bellway p.l.c. Annual Report Accounts 2007 [3] HIFIC Barnard Report, Future Trends in Timber Construction and Implications for HIE Region, accessed from www.forestryscotland.com/pages/download2.asp?file=attachments/HIFIC_Forres 07_Barnard.pdf [4] Ideally average stock and work in progress figures should be taken for calculating the ratio as they give more accurate ratios as average inventory accounts for any seasonality effects on the ratio. However, in the case of house building industry seasonality effect is not there. Moreover due to non-availability of 2005 figures, end of the year figures are used. . [5] Ideally average trade debtors figures should be taken for calculating the ratio as they give more accurate ratios. However, due to non-availability of 2005 figures, end of the year figures are used.. Trade receivables do not include other receivables not arising from sales (Refer Note 13 of Bellway Annual Report pp 68) [6] Ideally average trade creditors’ figures should be taken for calculating the ratio as they give more accurate ratios. However, due to non-availability of 2005 figures, end of the year figures are used. Trade payables do not include other payables not arising from purchases (Refer Note 15 of Bellway Annual Report pp 69) [7] Diluted EPS is based on the total outstanding shares after all Options and awards have been exercised. [8] EPS only indicates the possibility of a dividend. However, dividend decision is a corporate decision and there is no rule of thumb regarding its size and frequency. [9] http://finance.yahoo.com/q?s=BWY.L [10] Based on PE ratios published on 21 July 2007 by www.hemscott.com [11] Steed, Alison, The Sunday Times, 20 April 2008

Lust

Tana Broadway Mrs. Thomas EN 2000 Intro to Literature March 14, 2013 The Theme of Susan Minot’s â€Å"Lust† The theme of Susan Minot’s story â€Å"Lust† illustrates that in a space where love should be, there is emptiness and overwhelming sadness. Even though the girl realizes that happiness doesn’t come from sexual relationships, she continues to have sex with the boys anyway. Minot’s protagonists, mostly women, are in search of love. Romantic love is her aim. The young girl in this short story tries to fulfill that hole by having sex with multiple boys, in hopes of them caring and loving her.Minot was born in Massachusetts. Minot got her education at Brown University in Providence, Rhode Island. She found love, and then was married six weeks after they meet and are now separated. So she is also looking for someone to love. At the beginning of the story she is just experimenting with sex, as the story goes on she starts not remembering the b oys names and progresses into an even deeper sadness and emptiness. To begin with, Susan Minot portrays the girl in the story as someone trying to find herself, but doesn’t know how.The boys show her attention that makes her feel good and that feeling only last for the time she is with them. This becomes a cycle with many boys. She gets so involved with boys that she put them before her own interests, as stated in the story,† I could do some things well. Some things I was good at, like math or painting or even sports, but the second a boy put his arm around me, I forgot about wanting to do anything else, which I felt like a relief at first until it became like sinking into muck. (Minot 230). Her sexual appetite left her feeling empty inside. She wondered if there was something wrong with her. When a guy would ask her to sleep with them, instead of saying no, she would do it because she didn’t have anything else to say. The girl would keep having sex just to pleas e the guy. In the story, she says, â€Å"So I’d go because I couldn’t think of something to say back that wouldn’t be obvious, and if you go out with them, you sort of have to do something. †(Minot 231)As stated in Minot’s biography, in â€Å"Lust†, the characters are wistful; they can’t quite understand what it is they stand to gain from their sexual relationships, even though they need them like bodies need water. Women pursue and are pursued by men in a fast- whirling social environment that includes cocaine-snorting and glamorous careers in film and journalism. Minot’s sure rhythms capture the hard-boiled verities of this party life. Susan Minot grew up in Manchester, Mass. , was in college when her mother was killed in an automobile accident.She kept a journal from the age of 13, and after graduating from Brown, moved to New York in 1980 so she could write. She waitressed while completing her master’s of fine arts d egree at Columbia University’s Writing Division. WORK CITED McCLURG, JOCELYN, AND Book E. Courant. â€Å"A Leap from Love and Lust to World of Repressed Love Susan Minot’s Variations on Theme of Love. â€Å"Hartford Courant: 0. Proquest. Nov 04 1992. Web. 11 Mar. 2013 Minot, Susan. â€Å"Lust† Literature to Go. Ed. Michael Meyer. Boston: Bedford/ St. Martin’s, 2011. 229-236. Print. â€Å"Susan (Anderson) Minot Biography. † – Love, York, Lust, and Walter. N. p. , n. d. Web. 21 Mar. 2013.

Essay Types and Topics Can Be Fun for Everyone

Essay Types and Topics Can Be Fun for Everyone Moral argumentative essay topics are a few of the simplest to get carried away with. Obviously, an essay is going to be written dependent on the topic matter, while it's an argumentative essay, among the varieties of expository essays thrown at you, or any other forms of college essays, you will have to be acquainted with all the types in order to compose it. It should be written in some logical narrative order. A descriptive essay is just what it sounds like. Persuasive essays can be quite challenging. Expository essays are usually used on the SAT. Descriptive essays offer every sensory detail of what's actually described. Finally, if you're unsure about how to structure your paper, you can depend on essay templates. There are over a dozen varieties of essays, therefore it's easy to become confused. You should explain how you are going to classify different items in the debut of your essay. The Little-Known Secrets to Essay Types and Topics Aside from the introduction where the background information on your essay topic should be offered, you've got to compose a thesis statement, including your own personal view on the issue. As you have observed, different kinds of essay topics have various approaches to approach them, and in addition, they have their own benefits. After exploring various forms of essays, an individual may ask whether it's possible to locate a universal remedy to them all. The ideal essay writing service businesses have high high quality standards. One of the greatest methods to change anybody's mind is with an emotional investment. When you're picking your topic, bear in mi nd that it's much simpler to write about something which you currently have interest ineven in case you don't know a good deal about it. The truly amazing issue is there are seemingly endless varieties of argumentative essays that you could write you simply should have an opinion on something. When it has to do with writing an argumentative essay, the most essential point to do is to select a topic and an argument which you can really get behind. In persuasive essays, the author must always bear in mind that the goal is to convince or persuade the readers to act or think in a specific way instead of simply to inform them. An expository essay should use evidence and facts in order to spell out something, not only rely on personal opinion. The majority of the moment, narrative essays are written in the very first individual, I, My such selection of words makes a personal relation to the reader. The Hidden Treasure of Essay Types and Topics When it regards essays you're tasked to write, delegating a number of the burden to the professionals is sometimes the ideal call to make. There's no need to appear elsewhere! Therefore, the focus isn't merely descriptive. Still, picking the best candidates among the competition is critical. Top Essay Types and Topics Choices An argumentative essay requires you to choose a topic and have a position on it. You need to be very careful when choosing an essay topic. There are numerous e ssay types, and at times the topic itself is as vital as the form of the essay you're assigned. Recent argumentative essay topics that are related to society is going to do. Essay Types and Topics Secrets Descriptive essays are typical in elementary school and are usually employed as warm-up journal prompts at the start of a language arts lesson. Social science essays provide you with an opportunity to present your opinion and speak up. You might find that a number of the topics can be adapted to suit almost any type of writing assignment. College application essay topics are an essential portion of an entertaining and compelling bit of writing. Mind that each one of the names should be of the exact same kind of the word, for instance, all adjectives or nouns. Various types mean there are various styles of writing and all types of genres of writing that should be understood in order for one to approach an essay. So without further ado, here are a few effective writing tips to create your common app essay stick out! Having come across some beneficial information you may take notes and suitable citations in the appropriate format and references. Thus, it's important to read corresponding formatting guide. Essays can be both formal and informal. The most frequent writing type out there's an essay. It is like an empty canvas. Your essay has to be a masterpiece in itself. Researching the topic permits you to find out more about what fascinates you, and should you pick something you truly like, writing the essay will be more enjoyable. A financial essay can begin with a thesis, or it may begin with a theme. When prior brainstorming is finished, you can begin drafting your essay. Generally, it's a very long essay where you need to provide an intriguing research question and continually and persuasively answer it throughout the paper.

Comparison of Tokugawa and Manchu - 831 Words

Although the Manchus in China and the Tokugawa in Japan during the 17th and 18th centuries consolidated power into a central authority differently, their reasons for doing so were relatively similar, both being due to a certain internal conflict and their location relative to other empires. During the 17th and 18th centuries, the Chinese and Japanese faced much internal conflict, but while China faced a combination of economic setbacks and political weakness, the Japanese were riddled with wars along their countryside. First, the Chinese emperor was too weak in comparison to his bureaucracy, which ended up making most of the decisions for the last Ming dynasty emperor. This was due to the emperor’s realization that having a title as Son†¦show more content†¦China was part of the mainland, accessible by both land and sea. This exposed China’s borders greatly as there was much land and coast to protect, leading to consequent invasion. On the other hand, Japan was isolated as an island, only accessible by sea. This protected Japan by leaving only the coast to protect from invaders, and almost a lack of invaders. They did not have to deal with nomads in the north and west or rising empires in the south, but rather shared a common awareness with China for Russia. Both feared Russia and Europeans as well because of the new rise of their empires and their expeditions to China and Japan. Japan feared the Russians because they were pressing hard to engage in trade with them. In contrast, China feared the Russians because of their new expansion and political power after several wars and conquests. Both also greatly feared the Europeans because of their behavior at ports they were at and their aggressive style of trade and Christianity. The Chinese despised the Europeans because they were rowdy and obnoxious at port cities like Macao, while the Japanese feared the Europeans because of their aggressive conversions of Christianity that sparked some up risings. All in all, the Japanese and Chinese had vastly different locations and geography which led to different problems arising, butShow MoreRelatedThe Relationship Between Japan And Japan During The Modern Era2253 Words   |  10 Pagesknown as the Meiji Ishin, Renovation Revolution, Reform, or Renewal, was a series of events that restored imperial rule to Japan in 1868. â€Å"Meiji Restoration, In Japanese history, the political revolution that brought about the fall of the Tokugawa shogunate and returned control of the country to direct imperial rule under the emperor Meiji, beginning an era of major political, economic, and social change known as the Meiji period (1868-1912). This revolution brought about the modernizationRead MoreEssay on Change Analysis Chart Postclassical (600-1450 C.E.)8730 Words   |  35 PagesHeaven (Natalie) Direct Comparison: †¢ As seen by the examples of Emperor Yang Jian and Hongwu, who reigned almost eight centuries apart, the Mandate of Heaven was used as a means to create a centralized bureaucracy, and construct a more controlled, yet efficient rule. Analysis: †¢ The continued use of the the Mandate of Heaven as a means of justification of rule and primacy of leadership throughout multiple centuries of Chinese dynastic rule demonstrates the Direct Comparison: Between the years