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Inter-firm and industry analysis Essay Example

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Inter-firm and industry analysis

The analysis evaluates two firms from UK and US and their respective industry performance. The two firms that have selected under the analysis are Ted Baker plc and Passport Brands from UK and US respectively.The financial statements of the firms have been reformulated to segment the financial data into operating and financing activities. Thus, the reformulated financial data are the one that have been utilized in undertaking the financial analysis. This allows the financial analyses undertaken to represent an accurate position of the different firms under analyses. Similarly, the financial data that have been used in deriving the financial analysis are from balance sheet and income statements. This is because the two financial statements are primary in depicting the financial position and performance of a form respectively. In addition, the profitability analyses of the firms have been demonstrated by simulating the return on equity model (ROE).One of the inter-firm analysis tools that have been used in analyzing is the profitability analysis. The profitability analysis evaluates the return potential of the two firms due their performance over the years analyzed. Thus, the table below reflects the profitability of the two firms under consideration using the reformulated financial statements. The profitability ratios have been derived from ROCE through two levels as depicted in the table below. Similarly, the comparative graphs of the two firms reflected below depict the profitability trend in the last five years. This helps in evaluating the profitability of the two firms for an interested investor.The profitability ratios reflected in the table above reveals that Ted Baker is more profitable compared to Passport Brands. Thus, investors should expect to earn more by investing their capital under Ted Baker firm due to its superior profitability potential. The profitability of the firms has been derived by the profitability drivers that determine the returns common equity holders should expect from their capital investment (Sinha, 2009). The ROCE is the return on common equity that reflects the return common shareholders should form their capital investment.Thus, the ROCE ratios reflected for the two firms in the last five years reflect that on average, Ted Bakers promise a higher ROCE compared to Passport Brands Company. This is because the ROCE trend

Reference

Brigham, E. F., & Houston, J. F. (2009). Fundamentals of financial management. Mason, OH: South-Western Cengage Learning.

Fridson, M. S., & Alvarez, F. (2011). Financial statement analysis: A practitioners guide. Hoboken, N.J: Wiley.

Gibson, C. H. (2012). Financial Reporting and Analysis. Boston: South-Western Pub.

Ingram, R. W., & Albright, T. L. (2009). Financial accounting: Information for decisions. Mason, OH: Thomson/South-Western.

Khan, M. Y., & Jain, P. K. (2010). Financial management. New Delhi: McGraw-Hill.

Moyer, R. C. (2012). Contemporary financial management. Mason, OH: South-Western, Cengage Learning.

Peterson, D. P., & Fabozzi, F. J. (2012). Analysis of financial statements. Hoboken, New Jersey: John Wiley & Sons.

Rajasekaran, V., & Lalitha, R. (2011). Financial accounting. New Delhi: Dorling Kindersley.

Sinha, G. (2009). Financial statement analysis. New Delhi: PHI Learning Pvt Ltd.

Thomson-Reuters. (2014). Ted Bakers corporation profile. Retrieved March 25, 2014, from http://www.reuters.com/finance/stocks/companyprofile?symbol=TED.L

Wahlan, J., Baginski, S., & Bradshaw, M. (2010). Financial reporting, financial statement analysis and valuation: A strategic approach, Seventh-Edition. Boston, OH: South-Western.

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preview essay on Inter-firm and industry analysis
  • Pages: 10 (2500 words)
  • Document Type: Essay
  • Subject: Marketing
  • Level: Undergraduate
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