Structured extracts from a Fundamental Analysis Report Custom Essay

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Report Style
Company–Tesco UK

1. Obtain the last 5 years audited Annual Report and Accounts for your chosen company. Place labelled hard copies of the information specified in (BRIEFING NOTES (i)) in an Appendix to your report.

2. Read the Directors’ reports and Chairman’s Statements for the last 5 years. Explain the Business Model of the company and how it has changed over the 5 years under review.
Also: critically locate your company in the context of competitors or other comparable companies.
See BRIEFING NOTE (ii). 360 words

3. Using the specified left to right 5 year format summarise the Income Statements over the last 5 years.
Also: in as clear a manner as possible neatly schedule:
• revenue growth per year
• average annual revenue growth rate
• annual gross margin (if available)
• annual operating margin (before Exceptional items, if applicable)
• annual operating margin (after Exceptional items)
• Interest cover
See BRIEFING NOTE (iii)

4. In numerical terms only: using your own words: summarise the historic profitability of the company and explain how the published numbers relate to each other. Highlight trends, key numerical issues and any standout features.
Base your comments solely upon the numerical data shown in (iii) and do not attempt to link any of the numbers to the business model yet.
Your answer should clearly demonstrate that you understand revenue and gross margin drive gross profit; gross profit and indirect costs drive operating profit; and that operating profit and all the other items listed below operating profit drive the reported profit for the year.
See BRIEFING NOTE (iv). 200 words

5. By linking the numbers with the business model activity and wider business environment: critically explore and explain why Revenue has behaved as it has done so over the past 5 years. Ensure that any published Segmental Split information is used to assist the analysis.
Ensure that robust links between the numbers and the business model are established, quantified and critically explored: with higher marks being awarded for scripts that carry a “sense of proof”.
See BRIEFING NOTE (v). 300 words

6. By linking the published numbers and calculated metrics with actual business model activity and the wider business environment: critically explore and explain why other key aspects of the Income Statement have behaved as they have done so over the past 5 years. Ensure that relevant margins, KPIs and drivers are used to assist the analysis.
Ensure that robust links between the numbers and the business model are established, quantified and critically explored: with higher marks being awarded for scripts that carry a “sense of proof”.
See BRIEFING NOTE (vi). 360 words

7. Critically compare the Income Statement performance of your company with your chosen comparator companies.
Highlight similarities but ensure that all major variances are explained in business model terms and critically reflected upon.
Please do not compare companies of differing sizes solely using absolute amounts, such analysis is generally meaningless. Use absolute amounts to establish relative size differentials – but after establishing relative sizes use metrics such as growth rates and margins to compare.
This question is asking you to explain how and why your company is different from other comparable companies. Strong answers will link the numbers and metrics with the business model.
See BRIEFING NOTE (vii). 360 words

8. Using the specified left to right 5 year format summarise the Cash Flow Statement over the last 5 years.
See BRIEFING NOTE (vii).

9. Critically summarise the key features of the Cash Flow: making sure that robust links with the Income Statement, business model and financing structure are made.
See BRIEFING NOTE (viii). 220 words

10. Informed by your work above: draft an Executive summary in your own words and written in bullet point form that:
• States the name of the chosen company: and the period under review.
• Very briefly summarises key Income Statement data (and metrics) over the past 5 years.
• Very briefly summarises key Cash Flow data (and metrics) over the past 5 years.
• Highlights the key critical findings of the Fundamental Analysis that you have undertaken. Such findings must robustly link the numbers to the business model.
See BRIEFING NOTE (ix). 200 words

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