a. As a financial analyst at a leading UK investment company, one of your tasks is to assess drivers of profitability, in order to provide investment recommendations. Required: Based on the current year (2022) conditions, critically discuss three internal and three external factors that would affect the profitability of firms operating in the airline industry. b. The summarised reformulated items (£) for B&M plc for financial years 2020 and 2021 are given below: 2021£ (millions) 2020£ (millions) Operating assets 3322.45 3530.43 Operating liabilities 561.26 611.08 Financial assets 3.77 16.70 Financial liabilities 2031.98 2068.65 Common Shareholders' Equity (CSE) 732.97 867.40 Revenues 4801.43 3813.39 Operating Income 503.74 170.10 Net Financial Expense 75.64 56.97 Comprehensive income 428.10 113.13 Required: i. Calculate the Return on Common Equity (ROCE) for 2021 and 2020, using the first level ratio decomposition approach, and discuss your result. ii. Calculate the Return on Net Operating Assets (RNOA) for 2021 and 2020, using the second level ratio decomposition approach, and discuss your result
a. As a financial analyst at a leading UK investment company, one of your tasks is to assess drivers of profitability, in order to provide investment recommendations.
Required:
Based on the current year (2022) conditions, critically discuss three internal and three external factors that would affect the profitability of firms operating in the airline industry.
b. The summarised reformulated items (£) for B&M plc for financial years 2020 and 2021 are given below:
2021£ (millions) 2020£ (millions)
Operating assets 3322.45 3530.43
Operating liabilities 561.26 611.08
Financial assets 3.77 16.70
Financial liabilities 2031.98 2068.65
Common Shareholders' Equity (CSE) 732.97 867.40
Revenues 4801.43 3813.39
Operating Income 503.74 170.10
Net Financial Expense 75.64 56.97
Comprehensive income 428.10 113.13
Required:
i. Calculate the
ii. Calculate the
Step by step
Solved in 5 steps
