AF4S31- Strategic Financial Management - Interpreting Financial Position

Assignment Task

Scenario

Strategic financial management is the process that manages the company’s finances to meet its objectives. Analysing the financial information is vital to ensure plans are feasible for sustainable business and growth. Financial analysis also is optimal for shareholders and stakeholders to understand the financial performance and position of a company in an easyto-read format.

There are two organisations to be evaluated:

First is the Department of Health and Social Care (DHSC); an organisation that is responsible for overseeing health and social care policies, promoting public health, and ensuring the provision of high-quality and accessible services in the UK.

Second is the Wm Morrison Supermarkets Ltd; a retailer of food, fuel, clothing, and general merchandise in the United Kingdom.

Task 1 Ratio Analysis

i) Using the financial statements provided in DHSC’s annual report, calculate the ratio results for two consecutive years, 2021 and 2022. The annual report containing the information to be used can be found using the link below:

Ratios to be calculated using ONLY the formulas provided in the ratio handout are:

1. Acid test/Quick ratio 

2. Current ratio

3. Debt Ratio 

4. Return on taxpayers’ equity 

ii) Using the financial statements provided in their annual report, calculate the ratio results for two consecutive years, 2021 and 2022. The annual report containing the information to be used can be found using the link below:

Ratios to be calculated using ONLY the formulas provided in the ratio handout are:

5. Gross profit margin 

6. Operating profit margin 

7. Return on Capital Employed

8. Acid test ratio 

9. Current ratio 

10. Return on equity

11. Dividend per share 

12. Interest cover 

13. Gearing ratio/Debt Ratio

14. Working capital cycle (WCC) 

iii)  The ratios must be presented in an appendix with all workings clearly shown. They should only be referred to in the main body of the report.

•  Ensure all calculations are labelled clearly.

iv) Analyse and evaluate the ratio results to determine the organisation’s performance over the two-year period.

• Explain the results and any possible reasons for annual changes based on economic events (both organisations).
• Use graphics to present your results and to illustrate any changes (both organisations).
• Comparison to a competitor in the retail industry could be used as a benchmark for Wm Morrison Supermarkets Ltd (just for only Wm Morrison Supermarkets Ltd) 

Task 2 - Critical evaluation on Corporate Governance

The Corporate Governance Regulations promotes the principles of good governance, accountability, and transparency in annual reporting practices.

This includes providing clear and comprehensive information to the stakeholders and the public about an organisation activities, management and financial performance.

Even though the DHSC is not following the reporting and guidelines set by corporate governance regulations but there is an emphasis on transparency, accountability, and financial stewardship in its annual report.

Focusing on these three functions of transparency, accountability, and financial stewardship, critically discuss the similarities and differences between the annual reports of DHSC and Wm Morrison Supermarkets Ltd.

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