Financial Analysis

University of Strathclyde

Department of Accounting and Finance

M.Sc. Finance, M.Sc. Investment & Finance, M.Sc. International Banking &

Finance and M.Sc. International Accounting & Finance

(2013/2014)

Assignment 2

Subject:

AG911 Accounting & Financial Analysis

Lecturer:

Margaret Stewart & Richard Grey

Students Name & Number:

Mohamad Danial Bin Hairudin

201375448

Panadda Jantarawiwat

201381093

Muhamad Saad Khan

201355786

Finn Andre Loeken

201365655

Isabell Marks

201393843

2nd December 2013

TABLE OF CONTENTS

INTRODUCTION: SOFTWARE AND COMPUTER SERVICES INDUSTRY 1!

1. SUMMARY SECTION: TELECITY GROUP PLC

3!

1.1. TELECITY GROUP PLC – ‘POWERING THE DIGITAL ECONOMY’

3!

1.2. SWOT ANALYSIS

5!

1.2.1. STRENGTHS

5!

1.2.2. WEAKNESSES

6!

1.2.3. OPPORTUNITIES

6!

1.2.4. THREATS

7!

1.3. BALANCED SCORECARD

7!

1.4. INVESTMENT RECOMMENDATION

8!

2. DETAILED SECTION

10!

2.1. ACCOUNTING ANALYSIS

10!

2.1.1. KEY ACCOUNTING POLICIES

10!

2.1.2. ACCOUNTING FLEXIBILITY

13!

2.1.3. QUALITY OF THE COMPANY’S DISCLOSURES

14!

2.1.4. RED FLAGS

14!

2.1.5. ADJUSTMENTS

14!

2.2. FINANCIAL ANALYSIS

16!

2.2.1. PROFITABILITY

16!

2.2.2. LIQUIDITY

20!

2.2.3. EFFICIENCY

21!

2.2.4. CAPITAL STRUCTURE

23!

2.2.5. INVESTMENT

26!

2.3. CONCLUSION

27!

3. REFERENCES

28!

4. APPENDIX

29!

i

TABLE OF FIGURES

Table 1. Balanced Scorecard Outcome .......................................................... 8!

Table 2. Analyst Report on Telecity Group plc ............................................... 9!

Table 3. Profitability Ratios, Telecity Group plc ............................................ 16!

Table 4. Operating Margin Ratio, Industry .................................................... 17!

Table 5. Net Profit Margin Ratio, Industry ..................................................... 18!

Table 6. Return...