Financial Appraisal
Financial Appraisal
1.0 Analysis
This report provides an analysis of the performance of ITE Group over three consecutive years (2007-2009), using various financial ratios; for the benefit of potential shareholders, lenders or suppliers. The report also indicates how non-financial performance indicators can help an organisation measure performance. This report will also look into the net present value method of appraisal, and explain its advantages and disadvantages.
2.0 Main Content
The focus of the first part of this report is to analyse the performance of the ITE Group. The “ITE is one of the world’s leading organisers of international trade exhibitions and conferences and specialises in organising events in growing and developing markets.” It has expanded its portfolio in many different countries all around the world. They are organisers of trade exhibitions, conferences and professional congresses.
(ITE Group PLC, 2010)
In order to analyse their performance a range of financial measures need to be looked into. Financial ratios are a useful measure on a company’s performance and financial situation. The various ratios that will be covered in this report to analyse the performance of the ITE Group are:
Profitability ratios
Investment ratios
Efficiency ratios
Capital gearing ratios
2.1 An analysis of the performance of the company for the benefit of a potential shareholder
2.1.1 Profitability Ratios
Profitability ratios measure how effective the firm is at generating profits given sales and or its capital assets.
Gross Profit Margin Ratio
The gross profit margin is a measure of the gross profit earned on sales. The gross profit margin considers the firm 's cost of goods sold, but does not include other costs. It helps investors gain an idea of how well sales and cost of goods sold are being managed relative to sales. Potential shareholders will want to see how effective the company that they intend on investing into is at
1.0 Analysis
This report provides an analysis of the performance of ITE Group over three consecutive years (2007-2009), using various financial ratios; for the benefit of potential shareholders, lenders or suppliers. The report also indicates how non-financial performance indicators can help an organisation measure performance. This report will also look into the net present value method of appraisal, and explain its advantages and disadvantages.
2.0 Main Content
The focus of the first part of this report is to analyse the performance of the ITE Group. The “ITE is one of the world’s leading organisers of international trade exhibitions and conferences and specialises in organising events in growing and developing markets.” It has expanded its portfolio in many different countries all around the world. They are organisers of trade exhibitions, conferences and professional congresses.
(ITE Group PLC, 2010)
In order to analyse their performance a range of financial measures need to be looked into. Financial ratios are a useful measure on a company’s performance and financial situation. The various ratios that will be covered in this report to analyse the performance of the ITE Group are:
Profitability ratios
Investment ratios
Efficiency ratios
Capital gearing ratios
2.1 An analysis of the performance of the company for the benefit of a potential shareholder
2.1.1 Profitability Ratios
Profitability ratios measure how effective the firm is at generating profits given sales and or its capital assets.
Gross Profit Margin Ratio
The gross profit margin is a measure of the gross profit earned on sales. The gross profit margin considers the firm 's cost of goods sold, but does not include other costs. It helps investors gain an idea of how well sales and cost of goods sold are being managed relative to sales. Potential shareholders will want to see how effective the company that they intend on investing into is at
References: Documents for Small Business & Professionals., 2010. Ratio Analysis. United States: Docstoc. Available from: http://www.docstoc.com/docs/9422404/Ratio-Analysis [Accessed 10 December 2010] Groppelli, A, and Nikbakht, E., 2006. Finance. New York: Barrons Educational Series. Available from: http://books.google.co.uk/books?id=m1iBmIVz2mkC&printsec=frontcover&dq=Finance+%C2%A0By+Angelico+A.+Groppelli,+Ehsan+Nikbakht&hl=en&ei=1_4KTdmyH8rAhAfUvNyCDA&sa=X&oi=book_result&ct=result&resnum=1&ved=0CDAQ6AEwAA#v=onepage&q&f=false [Accessed 15 December 2010] Investor Words., 2010. Net Profit Margin. Fairfax: Web Finance. Available from: http://www.investorwords.com/3260/net_profit_margin.html#ixzz18CrV7UM0 [Accessed 10 December 2010] ITE Group PLC., 2009. About ITE. London: ITE Group PLC. Available from: http://www.ite-exhibitions.com/glance.aspx [Accessed 8 December 2010]