One of the important element of understanding accounting and finance related issue is the ability of reading financial statement of the company and make sense of numbers provided in the balance sheet and income statement. These numbers would provide an indication of company performance in the last year in terms of profitability, efficiency, solvency, liquidity, dividend, share price and a number of other indicators. Considering the importance of the valuable information one could get from the financial report of a company, you are asked to perform a number of tasks. Use two companies from the same sector as a case study. These companies registered on Saudi stock exchange.
Saudi Public Transport Co.
Saudi Industrial Services Co.
Download annual reports of these companies covering four years data. You could convert PDF files data contained in the balance sheet, income statement and cash flow into Excel using freely available software to convert PDF file to Excel file (just google search). Once annual reports are stored and data is transferred to Excel, perform the following task:
1. Write one paragraph explaining why financial and operational performance analysis is important and why you are doing this.
2. Write one paragraph providing history of both companies you have selected.
3. Explain the general performance of the industry where these companies belongs to and overall economic environment for the time period covered in your analysis (max. two paragraphs).
4. Now calculate financial ratios which were discussed during the lectures and given in power point slides and explain the trend. Make sure that you provide explanation of the results adequately. Your marks depends on EXPLNATION NOT JUST CALCULATION OF NUMBERS!!!
5. Perform a comparison of the both firms. Overall which firm did better and why? Why part is important in this regard.
* You could use a section in annual report called “director report” to get some idea about why a company has done better/worse. Of course you could use google to get more info in this regard. You could also look at consultancy (brokerage) reports and a number of other sources. Marks depends on the quality of the analysis rather than just calculating numbers. Lot of data could go to appendix. Make use of graphs for comparison.