This paper summarises in a short and concise manner the potential benefit of financial analysis to a prospective investor. The company ADVANCED MEDICAL SOLUTIONS GROUP PLC (AMS) was chosen at random – figures used are from the group as a whole.
In section (i.), I will measure the companies past performances related to Financial Statements (F/S) and identify its strengths and weaknesses associated with this information.
In section (ii.), I will comment on the limitation and usefulness of ROCE vs. EVA & MVA.
Table of Contents
- 1.0 Question 1
- a. Abstract
- b. Introduction- Business Statistics of Company
- 1.i Advanced Medical Solutions Group (AMS) plc - Corporate Analysis
- 1.i.a Corporate Performance over Past two Years
- 1.i.b Control of Working Capital/Liquidity
- 1.i.c Funding/Capital Structure of AMS
- 1.i.d Implications of Ratio's - Comments to Investor
- 1.ii Judging the Profitability of a Company - ROCE Ratio and It's Limitations
- Alternative or other Performance Measurements - Comments on EVA & MVA
- 2.0 References
- 3.0 Appendix
Objectives and Key Themes
This paper analyzes the financial performance of Advanced Medical Solutions Group PLC (AMS) and demonstrates the value of financial analysis to investors. The analysis focuses on AMS's corporate performance over the past two years, highlighting its strengths and weaknesses. The paper also compares the usefulness of different performance metrics, including ROCE, EVA, and MVA.- Financial statement analysis and its application to investment decisions
- Assessing the profitability of a company through various ratios
- The strengths and limitations of different profitability metrics (ROCE, EVA, MVA)
- Analyzing the performance of AMS based on its financial statements
- Identifying key factors influencing AMS's financial performance
Chapter Summaries
1.0 Question 1
This section introduces the paper's objective, which is to demonstrate the value of financial analysis for investors. The company chosen for analysis is Advanced Medical Solutions Group PLC (AMS). The section outlines the key areas of analysis: AMS's corporate performance over the past two years, and a comparison of different profitability metrics.1.i Advanced Medical Solutions Group (AMS) plc - Corporate Analysis
This section focuses on analyzing AMS's corporate performance based on profitability ratios. It includes a detailed explanation of the chosen ratios, their calculation methods, and their relevance in assessing a company's financial health.1.i.a Corporate Performance over Past two Years
This subsection provides a detailed analysis of AMS's financial performance over the past two years, utilizing key profitability ratios. The analysis examines specific trends in the company's financial data, comparing performance indicators to industry standards and highlighting the company's strengths and weaknesses.1.ii Judging the Profitability of a Company - ROCE Ratio and It's Limitations
This section delves into the limitations of the ROCE ratio and discusses alternative performance metrics like EVA and MVA. The author examines the advantages and disadvantages of each metric in evaluating a company's profitability.Keywords
The paper focuses on financial statement analysis, profitability ratios, corporate performance, ROCE, EVA, MVA, and the case study of Advanced Medical Solutions Group PLC (AMS). These key terms and concepts are utilized to understand the value of financial analysis for investors and to assess the financial performance of a company.Frequently Asked Questions
What is the benefit of financial analysis for an investor?
Financial analysis helps investors identify a company's past performance, strengths, and weaknesses, providing a solid basis for predicting future potential and making informed investment decisions.
What is ROCE and what are its limitations?
Return on Capital Employed (ROCE) measures profitability. However, its limitations include being based on historical accounting data and its potential to be manipulated by accounting choices, which may not reflect current market value.
What are EVA and MVA in corporate analysis?
Economic Value Added (EVA) and Market Value Added (MVA) are alternative performance metrics. EVA focuses on the value created over the cost of capital, while MVA measures the difference between market value and capital contributed by investors.
Which company is analyzed in this paper?
The paper uses Advanced Medical Solutions Group PLC (AMS) as a case study to demonstrate financial statement analysis and corporate performance evaluation.
How is liquidity measured in this analysis?
Liquidity is assessed through the control of working capital and specific financial ratios that show the company's ability to meet its short-term obligations.
Why is capital structure important for investors?
The capital structure (funding) indicates how a company finances its operations through debt and equity, which directly influences its risk profile and long-term stability.
- Quote paper
- MBA Andreas Keller (Author), 2003, Managerial Accounting - Managing Financial Resources, Munich, GRIN Verlag, https://www.grin.com/document/178458
