Athina Ltd: Horizontal Financial Ratio Analysis

Submission details   For this assignment, you are required to submit:   • a report as a Word (or similar) or PDF file.   Please refer to the ‘Assessment preparation’ area of the module for further guidance.

Submission of assignments

All assignments must be submitted online in the module area of the VLE. The assignment submission link opens 21 days before the due date. Please refer to the information provided in the ‘Assessment preparation’ week for general submission guidance.

NOTE: Postal submissions will not be accepted.

Learning outcomes

Code	Description
LO1	Critically evaluate accounting systems that aid decision-making.
LO2	Critically appraise the financial strength of a business using recognised and innovative techniques.
LO4	Critically interpret and communicate statistical information and financial results to support decision-making.

Scenario

Assume that you are a senior investment analyst working for Athina Ltd, an investment group located in London, UK. The investment committee of Athina Ltd trusts you with their investments and you have regular meetings with them to discuss the direction that the portfolio should take. The sustainable stance, as broadly defined, is very important to all members of the investment group.

Athina Ltd is considering investing in Redrow plc, one of the UK’s most profitable construction companies, and you are required to prepare a report to explain your recommendation. Your analysis must consider the financial and non-financial data of 2021 (download the Redrow plc (2021) annual report using the link below). Data produced after this date must not be used.

Task

Write a report for the Athina Ltd investment committee to recommend whether to invest in Redrow plc or not.

Your report should:

1. Provide a horizontal financial ratio analysis of the Group accounts of Redrow plc (2021) from their 2021 Annual Report (pages 180–183), comparing the years 2020 and 2021. The financial analysis should cover the following ratios and you should explain the results in succinct and persuasive ways:

• Current Assets ratio;
  • Return on Equity (DuPont approach) ratio;
  • Trade creditor payment period;
  • Earnings per share (assume 345 million total shares);
  • Operational Cash Flow ratio.

• Provide a critical analysis of the sustainability practices of Redrow plc.

• Make a clear recommendation (advice) at the end of your report whether to invest in Redrow plc or not, based on your analysis in parts a) and b).

• Include an appendix showing the calculations with full workings for the ratios in section a).

An executive summary will be required.

Reference list and bibliography

You should include a reference list with a minimum of five separate relevant and appropriate sources that you have written about and cited within your work.

A bibliography of uncited sources is not required.

Further information to support you with this assignment is available within the study materials for this module on the UCEM VLE. If you have any questions about this assignment, please contact your Module Team using the Assignment forum in the relevant Assessment preparation week on the VLE.