1.

0 List of key expressions

Key words
Analysis

Introduction

Analysis of financial performance and position of (company) in

20x1 and 20x0 ( vice versa )

This report is based on draft/audited financial

statements.
The report has been approached from the point of view
of a prospective acquisition.
Figures relating
Highlighted
Focus and tally
Favorable effect / favorable adverse, due to
Consistent to compare
Investment represented
Consider the impact

Body
Profitability

ROCE is often considered to be the primary measure of

operating performance
ROCE measures the overall efficiency of management.
Another observation is that XXX Ltd has been able to
take advantage of the receipt of government grants.
Given the economic climate in 201X these are probably
reasonably good results and may justify the Chairmans
comments.
Given there were no disposals of non-current assets, the
ROCE on X companys net assets is ( the net asset
increased/decreaseby profit after tax ). Put another
way, without the contribution of $ to profit before tax, X
company underlying profit would have been raise/loss
of ..$ => positive/positive ROCE.
The principal reason for the beneficial impact of X
company is that its profit margin at gross and
net(before tax)
It should be observed that other contributing fator to
ROCE is the net asset turnover.
No disposal
Put another way

Liquidity

Underlying
Beneficial impact
Far superior
Highly misleading
Justifiable
Unwelcome effects

Primary ratio that are used for measuring liquidity

comprises of current ratio and quick ratio
The company's liquidity position is measured by the
current ratio.
A cash flow statement would give a better appreciation
of the bank / Short term borrowing position.
Deteriorated dramatically during the period
A consideration of component elements of current ratio
suggest that (inventory/trade payables payment
period/collection period
for trade receivables.impact on the current ration).
Relatively healthy
Serious concern
Factoring sometimes seen as a consequences of
declining liquidity
Real culprit
In isolation
Right issue
Notable difference

Gearing

High gearing comes with high risk, any future downturns

in the company's results would expose the equity
holders to very low returns and continued low liquidity
will result in trouble in payment of loan interest.
The effect of gearing means that all of the profit after
finance costs is attributable to the equity.
Low interest cover is a direct result of high gearing and it
makes profits vulnerable to small changes in operating
activity.
The company has gone the position of (gearing) in
to .(gearing) in this has been caused by .(loan
note/share holdersequity.)
Manner of funding
High gearing does not come without risk

Efficiency

Investment

Conclusion

Future downturn
Lower proportionate returns
High absolute terms and double level of gearing
Vulnerable

it could be argued that

Inventory holding period for 201X has improved,

compared to 201X.

The payment of dividend may be seen as a sign of

confidence of a future recovery.

It has disguised a serious deterioration of the underlying

performance and position of ABC Company.
On the basis of the above analysis, ( state about main
reasons affecting on profitability, liquidity, efficiency,
gearing).
There is no doubt
Wise move on management part
Disguised
Overall plan to diversify out
Retains a strong financial statement
Attractive

2.0 Contrast

Positive

Negative

Good

Bad

Increase

Decrease

Improve

Slacken

Superior

Inferior

Useful

Useless

Advantage

Disadvantage

Higher

Lower

Strengthen

Suffer

Gain

Loss

Receivable

Payable

Rise

Fall (downturn, decline, deterioration)

Profit

Loss

Indisputable

Questionable

Sufficient

Deficient

Diversify

Remain

Safe

Risky

Healthy

Unhealthy

Praise

Criticise

Major

Minor

Strong

Vulnerable

Exceed/Surpass

Fall short of

Appreciation

Depreciation

Beneficial

Adverse

Favourable

Unfavourable

Consistent

Inconsistent

Improve

Deteriorate

Extended period

Shorter period

Mitigate

Worsen

Elevate

Flat

3.0 Key words

1

appear to

caused by

consistent to compare

consider the impact

contributing factor

due to

disposal of

dramatic deterioration

even if

10 far exceed
11 far superior to
12 force entirely
13 great success
14 highlighted
15 improvement
16 issue of
17 looking in more depth
18 move on
19 put another way
20 particularly poor
21 represented
22 resulting in
23 related to
24 serious deterioration
25 the effect of
26 the figures relating
27 the proceed of
28 underlying
29 the change in the above
30 this report is based on
31 this may be a reflection of

32 the principal reason of beneficial impact of

33 it could be argued that
34 it should be noted that
35 it should be observed that