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11 pages/≈3025 words
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Harvard
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Mathematics & Economics
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English (U.S.)
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British Gas PLC Financial Statement Analysis and Appraisal (Essay Sample)

Instructions:
I would like to request the writer who did order 00012178 if possible and if they\'re not busy. Please use each of the investment appraisal methods using examples from British Gas projects in compliance with USO. Analyse results and comment on suitability of projects. Conclusion and recommendation for section 3 and also for the final report Please analyse and critically evaluate each option, so it is not just descriptive. Disregard fiber optics, just concentrate on USO. Pls explain clearly, using an example from published information concerning BG Group plc, the decision rule underlying each of the appraisal methods used above and how BG Group plc might apply each of these rules in making a long-term financial and strategic investment. BG Group plc as a public limited company is accountable to its shareholders in law. In addition to this accountability that it shares with all public limited companies, historical events around its formation have left it with a Universal Service Obligation (USO) to provide certain services to all sectors of the population regardless of ability to pay. (b) Identify, describe and explain investment appraisal methods that would be appropriate to include in BG's decision-making process when seeking to comply with the USO. Use the balanced scorecard you developed to suggest how the directors of BG could conduct an appraisal of the success of a project they have initiated some time (say 5 years) after the project was implemented. The choice of ratios should show the interdependence of the ratios in making correct judgements. Use the appraisal methods to analyse competing investment projects in the public and private sector and make justifiable decisions. as i dont see in the instructions source..
Content:
British Gas PLC Financial Statement Analysis and Appraisal
[Name]
[Course Title]
[University]
[Instructor Name]
[Date]
British Gas PLC is one of the biggest gas suppliers in the world. It is a public limited company based in the UK and it has operations in 25 countries in the five continents and it has business across the gas chain all around the world (BG-Group.com). The company has gone through a number of restructurings in the past due to the legal changes in the country. Following is the analysis and appraisal of the financial information of the company for the year ended 31 December 2011.
SECTION ONE
This section includes analysis of the published financial information of the British Gas Group for the year ended 2010. This section includes comparison of results with the previous year and the ratio analysis of the financial information.
Comparison of 2010 Results with 2009 Results
British Gas Group`s financial information shows a growth in the overall revenue of the group in the year 2010 as compared to the previous year. According to the consolidated income statement of the group, the total revenue of the group in the year 2010 was $17,166 million which is a significant growth as compared to the total revenue of $15,441 at the end of the year 2009. The increase in overall revenue is $1725 million which is a significant increase. The major business sectors that account for the overall revenue of the group are; exploration and production, liquefied natural gas, and transmission and distribution. A significant growth was observed in all the sectors in the year 2010 as compared to the year 2009.
The increase in revenue does not hold much interest for shareholders if the operating cost also increases, in this case, a decrease in the operating profit was observed. For the year 2010, the operating profit of the group was $5,562 million, while the operating profit in the year 2009 was $5,889 million. This decrease may be because of a significant increase in the operating costs and an increase in the losses on disposals of non-current assets and impairments.
The profit for the year 2010 was $3,500 million and the same was $3,470 million in the year 2009. Therefore it can be inferred that the increase was not much as compared to the proportion of the increase in the revenue. According to the Consolidated Statement of Comprehensive Income, the total comprehensive income for the year 2010 was $4,094 which is much lower the total comprehensive income for the year 2009 which was $5,206 million. The difference may be because of the difference in currency translation adjustments which were $1,180 in the year 2010 and $2,455 in the year 2009.
Ratio Analysis of Years 2010 and 2009
Ratio Analysis is conducted on the financial information of a company in order to infer whether the company is feasible for investment. Ratio analysis is highly important for shareholders and investors because it brings out the underlying relationships in the financial information of an entity. Ratio analysis can also help an investor in determining whether the investment in the company would be profitable or not. Following is the ratio analysis of the financial information of British Gas Group.
Liquidity
Shareholders and investors conduct liquidity analysis in order to ensure that the entity is eligible to pay off its short term debts. If the ratio is high, it can be inferred that the entity can easily cover its short term debts, however the conclusion would be opposite if the ratio is low. In case of British Gas Group, current ratio for the year 2010 is 1.121. Current ratio is the ratio of the entity`s current assets and current liabilities at the end of a given year. This ratio shows whether the current assets of an entity are enough to set off the current liabilities of the entity. If the ratio is 1, it would mean...
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