Financial Statement Report Project Finance Appraisal

3087 words - 13 pages

1.0 INTRODUCTION
2.0 CAPITAL STRUCTURE
2.1 Debt and Gearing
2.2 Equity
3.0 OPERATING PERFORMANCE AND LIQUIDITY
3.1 Profit before Tax:
3.2 Return on Capital Employed (ROCE)
3.3 Return on Equity (ROE)
3.4 Liquidity
3.5 Current Ratio:
3.6 Quick Ratio / Acid Test
4.0 DIVIDEND POLICY
4.1 Dividend Yield
4.2 Dividend Cover
5.0 BUSINESS STRUCTURE/ACTIVITIES
5.1 Land and construction:
5.2 Brand Partnership
6.0 SHAREHOLDERS’ RETURN
6.1 Returns
6.2 Price Earnings Ratio
7.0 COMPARISONS BETWEEN PERSIMMON PLC AND TAYLOR WIMPEY
7.1 Dividend Policy
7.2 Shareholders Return
7.3 Liquidity
8.0 FORECASTING
9.0 CONCLUSION
REFERENCE
APPENDICES
1.0 INTRODUCTION
This report aims to critically analyze Persimmon PLC’s financial performance based on an evaluation of the Annual Reports and accounts for the last three years. The company has a year-end of 31st December and accounts for 2016 to 2014.
The report also aim at drawing comparison between Persimmon Plc and Taylor Wimpey’s financial performance and their property activities
Persimmon Plc is the holding company for the Persimmon Group of companies founded in 1972. They are listed on the London Stock Exchange (PSN.L) and are a constituent of the FTSE 100 Index. Persimmon Plc has been publicly quoted since 1985 and today has a market capitalization of over £5bn.
2.0 CAPITAL STRUCTURE
The capital structure of a company can be financed through Equity or Debt, the relationship of this two criteria can be measured through the debt/equity or gearing ratio (leverage). This section provides an evaluation of equity and debt structure.
TABLE 2.1: Capital employed and gearing
YEAR
2016
Change (%)
2015
Change (%)
2014

EQUITY (£m)
2737.4
12
2455.8
12
2192.6

Total Assets
4144.6
9
3821.8
14
3356.3

Total Liabilities
1407.3
3
1366.0
17
1163.7

cash
913.0
60.6
570.4
50.7
378.4

Share capital(£m)
30.8
0.33
30.7
0.33
30.6

Share premium(£m)
10.6
14
9.3
91
103.4

Retained earnings
2182.7
14.7
1902.5
16
1640.5

DEBT (£m)
0

0

0

GEARING




NET GEARING (%)
-33.4

-21.3

-17.3

2.1 Debt and Gearing
Cash and net debt are used to measure balance sheet strength. Ensuring we have an appropriate capital structure to support different strategies is the key to success. There are £nil borrowings on the Persimmons account at 31 December 2014 -2016. Persimmon has kept a clean slate of debt since 2011.

Persimmon plc avoids debt by having a strong financial risk management and by establishing the Risk Committee which has the delegated task of overseeing the Board’s responsibility with respect to risk and internal control. This approach will mitigate the financial risks the Group faces which includes credit risk, liquidity risk, interest rate volatility and debt capital market pricing risk.
2.2 Equity
Total Equity:
For 2015 the Group’s total retained profits...

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