The purpose of this report is to present the best company from the peer group based on accounting and financial analysis. The peer group contains five companies from the industrial goods and services sector – Clarkson Plc, Stobart Group Ltd, Braemar Shipping Services Plc and Wincanton Ltd that listed on the main market of London Stock Exchange and Sutton Harbour Holdings Plc, which is listed on the Alternative Investment Market of London Stock Exchange. On the basis of analysis conducted, we highly recommend Clarkson Plc as a company worth of investment. The data used for production of this report is historical data which are publically available.
In the summary section of this report, we will provide detailed background of the selected company, including its financial highlights as well as comparison with other four peers’ financial performance.
The accounting analysis presents an overview of the accounting policies in the peer group.The financial analysis is the last part of this report containing profitability, liquidity, efficiency analysis and financial structure. Lastly, a comparison of investment figures is provided.
Table of Contents
1 Introduction
2 Summary Section
2.1 Clarkson Plc Background Summary
2.1.1 Financial Highlights
2.2 Competitors Summary
2.2.1 Sutton Harbour Holdings Plc
2.2.2 Stobart Group Ltd
2.2.3 Braemar Shipping Services Plc
2.2.4 Wincanton Ltd
3 Accounting Analysis
3.1 Accounting Policies
3.1.1 Basis of Preparation and Statement of Compliance
3.1.2 Key Accounting Judgments and Estimates
3.1.2.1 Trade Receivables
3.1.2.2 Revenue Recognition
3.1.2.3 Operating Leases
3.1.2.4 Adjusting Items
3.1.2.5 Goodwill
3.1.2.6 Depreciation
3.2 Accounting Evaluation
3.3 Potential Risk and Necessary Adjustments
4 Financial Analysis
4.1 Profitability Ratios
4.1.1 Return on Capital Employed (ROCE)
4.1.2 Return on Sharholders Funds (ROSF)
4.1.3 Gross Profit Margin (GPM)
4.1.4 Net Profit Margin (NPM)
4.2 Liquidity Ratios
4.2.1 Current Ratio
4.2.2 Quick Ratio (Acid Test)
4.3 Efficiency/ Working Capital Ratios
4.3.1 Inventory Turnover
4.3.2 Receivable Days
4.3.3 Payable Days
4.3.4 Cash Conversion Cycle
4.4 Financial Structure
4.4.1 Gearing
4.4.2 Interest Cover
4.5 Investment Ratios
4.5.1 Dividend Yield
4.5.2 Dividend cover
4.5.3 Earnings per Share (EPS)
4.5.4 Price/ Earnings Ratio (P/E Ratio)
5 Conclusion and Recommendations
Objectives and Topics
The primary objective of this report is to evaluate a peer group of five companies within the industrial goods and services sector to identify the most suitable candidate for investment. The research investigates accounting and financial health through a comparative analysis to determine which company offers the strongest performance metrics for investors.
- Accounting policy overview and financial statement evaluation.
- Comparative profitability analysis using key financial ratios (ROCE, ROSF, GPM, NPM).
- Liquidity and working capital efficiency assessment.
- Capital structure and financial risk examination via gearing and interest cover ratios.
- Investment potential analysis based on dividend history, EPS, and price/earnings ratios.
Excerpt from the Book
2.1 Clarkson Plc Background Summary
Clarkson Plc is a company based in UK with its headquarters in London. 75% of the company’s revenue is constituted by broking. The Company was founded in 1852 by Horace Anderton Clarkson. The main aim is to build long term relationships with the clients and to expertise to the even-wider and increasingly diverse client base across all sectors of the shipping and offshore industries, providing unrivalled professionalism. It has a market capitalization of GBP 893.39 million (Clarkson Plc, 2017).
The company has been providing the investors with the confidence to invest in with its high-level of profitability, creditability, reliability and execution of its securities, so it is a great choice for the investors to overweight the equity. Clarkson has maintained a staggering average gross profit margin of 96.28% in the last 5 years which ultimately results in more of the retained earnings helping the company to provide higher returns on investments to the investors on time and at an increased rate. Talking about the returns, the share price and the earning per share are also to be taken into consideration because that is the one of the majors where Clarkson has continuously shown a tremendous growth. The share price of the company went up to GBP 21.73 in 2016 from GBP 11.80 in the starting of the year 2012, eventually leading to increase in earnings per share for the shareholders from GBP 0.85 per share (2012) to GBP 1.20 per share (2016). Clarkson continues to maintain its remarkable dividend record, having increased the dividend paid for 14 consecutive years,
Summary of Chapters
1 Introduction: Defines the purpose of the report, which is to analyze five peer companies in the industrial goods and services sector to recommend the best investment choice.
2 Summary Section: Provides background information on Clarkson Plc and its competitors, outlining the rationale for selecting Clarkson based on its performance history.
3 Accounting Analysis: Examines the accounting policies and judgment areas of the peer group to ensure data comparability for the financial assessment.
4 Financial Analysis: Performs a detailed quantitative evaluation of the companies using profitability, liquidity, efficiency, and investment ratios.
5 Conclusion and Recommendations: Finalizes the study by justifying the recommendation to invest in Clarkson Plc due to its robust financial health and market position.
Keywords
Accounting Analysis, Financial Analysis, Clarkson Plc, Profitability Ratios, Liquidity, Capital Structure, Investment Ratios, Dividend Yield, ROCE, GPM, Earnings per Share, Financial Statement, Working Capital, Shipping Industry, Peer Comparison
Frequently Asked Questions
What is the core focus of this report?
This report focuses on conducting a comprehensive accounting and financial analysis of five companies in the industrial goods and services sector to provide an investment recommendation.
Which key areas are analyzed in this document?
The analysis covers profitability, liquidity, efficiency (working capital), financial structure (gearing), and investment-specific ratios for the selected companies.
What is the ultimate research objective?
The primary objective is to evaluate the financial performance of the peer group to determine which company, specifically Clarkson Plc, represents the best investment opportunity.
Which scientific methodology is applied?
The report utilizes comparative financial ratio analysis, supported by an accounting policy review and historical financial data from company annual reports.
What topics are discussed in the main body?
The main body contains a detailed examination of company backgrounds, accounting evaluation, and a granular breakdown of financial metrics across multiple categories.
Which terms characterize this research?
Key terms include accounting and financial analysis, profitability ratios, investment valuation, liquidity, and peer-group benchmarking.
Why is Clarkson Plc considered a strong investment candidate in this report?
The report highlights Clarkson's high gross profit margins, long-term dividend growth, and stable performance compared to its competitors over the 2012–2016 period.
How does the report handle differences in accounting periods?
The authors performed adjustments to the financial statements of the peer companies to align them with the same reporting period, ensuring that the ratio analysis remained comparable.
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- Moritz Meyer (Autor:in), Shreyans Jain (Autor:in), Hujing Zheng (Autor:in), Ming-Fong Lee (Autor:in), Aishwarya Agarwal (Autor:in), 2017, Accounting and Financial Analysis, München, GRIN Verlag, https://www.grin.com/document/426429
