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Business Performance
Analysis (Part 1)
Business Performance
Analysis (Part 1)
learning objectives
performance review
the stages of performance review
an example of a SWOT analysis Flatco plc balance sheet as at 31 December 2005
Flatco plc profit and loss account for the year ended 31 December 2005
reconciliation of operating profit to net cash flow from operating activities
Session Summary (1) Session Summary (1)
cash flow statement
reconciliation of net cash flow to movement in net debt/funds
cash flow statement – gross cash flows
cash flow statement – analysis of changes in net debt/funds
profitability ratios profitability ratios calculation
efficiency ratios
Session Summary (2) Session Summary (2)
efficiency ratios calculation
liquidity ratios
liquidity ratios calculation
investment ratios
investment ratios calculation
the best performance measure – cash or profit?
the advantages and disadvantages of using cash flow as a measure of company performance
Session Summary (3) Session Summary (3)
the advantages and disadvantages of using earnings per share (eps) as a measure of company performance
Tomkins plc EBITDA for 1998 to 2002
Session Summary (4) Session Summary (4)
carry out a performance review of a business, including the use of a SWOT analysis critically evaluate the limitations of the performance review process
differentiate between divisional manager performance measurement and economic performance measurement
analyse business performance through the use of ratio analysis of profitability; efficiency; liquidity; investment; financial structure
Learning Objectives (1) Learning Objectives (1)
use both profit and cash flow in the measurement of business performance
critically compare the use of cash flow versus profit as the best measure in the evaluation of financial performance
use earnings before interest, tax, depreciation and amortisation (EBITDA) as a close approximation of a cash flow performance measure
Learning Objectives (2) Learning Objectives (2)
the main aims of a business performance review are to provide an understanding of the business and provide an interpretation of results care must be taken in reviewing business performance, primarily because of lack of consistency in definitions, and changes in economic conditions
Performance Review (1) Performance Review (1)
An important area of business performance review is the use of ratio analysis looking at
profitability
efficiency
liquidity
investment
growth
financial structure
Performance Review (2) Performance Review (2)
The Stages of Performance Review
The Stages of Performance Review
An Example of a SWOT Analysis
An Example of a SWOT Analysis
Flatco plc Balance Sheet as at 31
December 2005
Flatco plc Balance Sheet as at 31
December 2005
Flatco plc Profit and Loss Account for the Year Ended
31 December 2005
Flatco plc Profit and Loss Account for the Year Ended
31 December 2005
Reconciliation of Operating Profit to Net
Cash Flow from Operating Activities
Reconciliation of Operating Profit to Net
Cash Flow from Operating Activities
Cash Flow Statement Cash Flow Statement
Reconciliation of Net Cash Flow to
Movement in Net Debt
Reconciliation of Net Cash Flow to
Movement in Net Debt
Cash Flow Statement
- Gross Cash Flows
Cash Flow Statement
- Gross Cash Flows
Format 1 Profit and Loss
Account
Format 1 Profit and Loss
Account
Cash Flow Statement – Analysis of Changes in
Net Debt/Funds
Cash Flow Statement – Analysis of Changes in
Net Debt/Funds
Profitability Ratios Profitability Ratios
