Question
1. Analyse the performance of your chosen company using relevant financial and non-financial ratios (5
years). Your analysis should include profit ratios, efficiency, liquidity and other ratios that you
consider relevant.
Section B 500 words
1. Critically evaluate the company’s corporate governance compliance and its impact on the brand and
reputation as reported in the press (print, online and social media)
2. Discuss the proposed medium term financial strategies for your selected company to become a
FTSE100 company or for your company to become dominant in the industry / sector.
Solution
1.0 Introduction
Financial measures of performance are insufficient to demonstrate the overall image of an entity. To affirm this, Marie et al. (2014) noted that organisations relying on financial performance measures end up with a constrained view of what happened. Additionally, Wadhwa (2017) argued that despite financial measures being relevant, they are insufficient performance evaluation system. The system equally needs to be inclusive of both the financial and non-financial measures which guarantee an improved definition and communicating of priorities to distinct stakeholders groups. The financial ratios adopt different measures of profitability, cash flow position return on investment, inventory turnover budget vs actual while non-financial include customer satisfaction, product/service quality, market share and employee efficiency (Gorgieva-Trajkovska et al., 2017). Taking this background into account, this report analyses the performance of Yu Group PLC using both the financial and non-financial ratios (See appendix 1). Also, the company corporate governance compliance and its impact on the brand and reputation is evaluated with their financial strategies to become an FTSE100 company.
1.1 Yu Group PLC Organisation Background
The Yu Group plc is a specialist supplier of energy and utility solutions to UK businesses (Yu Group PLC, 2019). The organisation equally operates in the supply of electricity, gas, water and other utility solutions to their business clients. Their customers include the small, medium and corporate businesses in entire Great Britain. In order to survive in this competitive sector, they integrate expert, personal service and competitive fixed prices aligned to their individual business needs. Over the years, the organisation has rapidly expanded attaining a significant market share with their scope of operation expanding to thousands of commercial sites in entire UK.
2.0 Analysis of Yu Group PlC
2.1 Financial Analysis
The financial analysis of Yu Group PLC is provided as a complex output of their overall performance. The output is provided by focusing on ratio indicators of liquidity, financial gearing, investment and market value. Similar to Baran et al. (2016) study, these indicators represent the synthetic indicators of the financial accounting and inform on the overall complexities of an entity subject performance interpretation. The financial ratios of Yu Group PLC represent the company economic performance which later proceeds to the primary areas and results of effectiveness, efficiency, production capacity utilisation and management practices. Also, as noted by Katríková and Gajdošová (2017), it identifies the organisation weaknesses and strengths as a tool for health diagnostics and providing critical information for the management and all stakeholders. In active practice, there are different indicators that have in the past been identified as being relevant which are grouped into individual areas of management evaluation and company financial health. According to Law and Singh (2014), the financial indicators include debt, liquidity, profitability, activity, capital market indicators among others. In this report, the indicators evaluated include profitability, liquidity, financial gearing, investment and market value.
2.1.1 Profitability Ratios
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