Financial and Management Accounting for Managerial Decision Making - Business Analyst - Chartered Financial Analyst (CFA) - Glaxo Smithkline PLC - Accounting and Finance Assignment Help

Assignment Task

Details

The project aims to allow you to demonstrate the application of some of the accounting concepts and theory in a practical scenario. Given the limited material we will have covered by the week of submission (week 4) the project is necessarily targeted and limited in scope. However, it will provide students with a worthwhile experience of the challenges involved in applying accounting analytics in a ‘real company’ context. 

Requirement

You are in the position of ‘Business Analyst’ at Dub-bank PLC with responsibility for the analysis of the financial statements of companies the bank is interested in as possible future investments. Your manager, Aoife Lee, likes to focus on earnings when assessing investments and has asked you to examine the income statement of Glaxo Smithkline PLC (GSK PLC), a UK listed international pharmaceutical company. She has recently returned from a Chartered Financial Analyst (CFA) investment conference where many of the participants spoke about the usefulness of EBIT and EBITDA as measures of earnings. Aoife has always focused on net income. She is aware that you have been studying the income statement at the London School of Economics and so she seeks your help. She would like you to address a number of issues: 

i. Calculate an appropriate, and useful, measure of underlying EBIT and EBITDA for GSK 

PLC for each year, based on the information provided in the appendix. Make clear any assumptions you make and explain each adjustment. (cleaning earnings – explain/justify for including/excluding each item) 

(50%) 

ii. Is EBITDA a useful number for financial analysis? (30%) iii. Aoife made notes on a number of other topics that were discussed at the conference and would like your help understanding whether you agree or disagree with each statement and why: 

a) “The new revenue recognition standard requires companies to break down their activities into obligations and this drives the recognition model” b) “Depreciation, applied systematically, produces an accurate asset valuation” (20%) 

Deliverables Draft a short informal report to Aoife (maximum 1,200 words excluding your actual calculation) addressing each issue. Your report should include: 

1. A short introduction;

2. The accounting analysis (underlying earnings calculations) and commentary on the various parts of the question as required;

3. Appendices, as needed 

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