In the present context we have to construction companies available to invest operating in a same stock exchange. It is advisable to choose the best after performing all the above analyses on the basis of financial reports of the companies from 2003 to 2005.
Income Report for Bell way Plc
Figures in million of pounds
Earnings before interest and tax
Earnings after tax
Retained income for the year
Balance sheet for Bell way Plc.
Bank Balance &cash
Total current assets
Total fixed assets
Total liabilities and equity
If the above results are converted into indexed values form the following results can be obtained.
Bank Balance &cash
Recommendation according to horizontal analysis: Though the investment decision cannot be taken only on comparison it can serve as one of the criteria. In case of two companies the profits and turnover had shown a trend of increasing. The total current assets of the Telford was not showing consistent trend when compared to Bell way Plc. The account payables in the 2006 were less for Telford and thus it maintained a increase trend in profit. But the decrease in account payables may show affect in the coming year and the increase trend may not be this much stronger. In contrast to Telford the Bell way was increasing the current assets along with account payables done and still maintaining the increasing trend of profit. This tells us about the good marketing, payment, asset increasing and profit retaining strategies and according to comparison it is advisable to invest in Bell Way
According to vertical analysis the items in the income account were calculated as the percentage of turnover. This tells us about the healthy and unhealthy trends of profit making, the company is experiencing.
In vertical analysis it can be observed that the bank balance, current assets were not following a healthy trend in case of Telford Plc. The liquidation of assets was maintained as cash in telford. ...
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