PPAC100 - Decision Making - Management - Analytical Tools - Investment - Accounting Assessment Answer

Assessment Task:

Assignment Brief
    
PART A
Ratios are widely used in the analysis of financial statements of companies. Whilst these ratios have their own advantages, these also have several limitations, which at times could result in inappropriate decisions being made, when purely based on the calculation of the ratio itself.Discuss the role of ratios and identify their limitations when used in assessing company performance.Suggest means of how these limitations may be overcome, when used in the area of performance assessment.                                 

PART B         PPAC100
Assume you are a single investor who trades in shares on the Sri Lankan stock market for long term gains. You have savings of Rs.1 million and decide to select a particular industry to make an investment in a single company within the identified industry.For this purpose you are required to identify a specific industry category within the Colombo stock exchange industry classifications, and also select two quoted public companies within this industry for purposes of your analysis/ decision. 

a)    Carry out a brief industry analysis of the identified industry. 
b)    Compare and contrast the performance of the two companies as a potential investor, using appropriate ratios in relation to a three year analysis.
c)    Carry out relevant interviews/discussions with key personnel in the industry/companies selected, and outline the outcome of these discussions in your report.
d)    Suggest in which of the two identified companies you would make your investment, justifying your selection. You may also use current statistics as at the date of your analysis, in arriving at your decision.
e)    Considering the change in share prices at the end of each year over the past 3 years and determine the profit/(loss) an investor may have made during each of these 3 years. Give consideration to a bonus issue of shares etc. during these respective years.
f)    Be creative in your analysis, and prepare a report based on the outcome of your analysis. 

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