To Board of Directors of Reed Elsevier Plc.From Report.docx

To Board of Directors of Reed Elsevier Plc.
From Reporting Accountant
Date 11th November 2015
Subject: Corporate performance analysis 2010 - 2014
Introduction
The following report shows the financial appraisal of Reed
Elsevier Plc. The financial analysis relates to five years
financial period covering the periods 2010-2014. In order to
have a full understanding of the figures computed I have
attached a summary of five appendices. This appendix shows
the vertical and horizontal trend analysis and the financial
ratios covering the relevant period included in your financial
statements.
Financial Ratio Analysis-Profitability
Reed Elsevier Plc. has maintained a high level of Return on
Capital employed during the five year financial period. The
Return on capital employed shows an upward trend over the
years from 15.01% in 2010 to 19.61% in 2014. This shows that
the company is performing above the industrial average
benchmark of 8%-11% which indicates a favourable business
performance and improvement in its profit margins. Further
progress can be made if the business utilises its fixed assets
more effectively and minimises its working capital.
The gross profit margin is viewed as gross profit expressed as a
percentage of total revenues. A high Gross profit margin
indicates increased profitability. As seen in our computation the
gross profit margin from 2010-2014 was 63.52%, 64.58%,
65.03%, 64.90% and 65.25%. The result implies that Reed
Elsevier Plc was able to generate £63.52, £64.58, £65.03,
£64.90 and £65.25 of operating profit from every hundred
pound of sales revenue in the corresponding financial years.
These ratios above shows a moderate increase from 63.52% in

2010 to 65.25% in 2014. Despite slight decrease in 2013 to
64.90%, the gross profit margin improved marginally by 63.52%
in 2010 to 65.25% in 2014. The decrease in gross profit margin
in 2013 might be due to rise in inventory cost. Reed Elsevier
Plc would be able to maintain a high profit margin by increasing
revenue while decreasing its operating cost simultaneously. It
may be plausible to increase selling price and reduce the cost of
sales. More so, the company may choose to alter its product mix
and sales mix in line with effective pricing policy.
Similarly, a review of the net profit margin shows a steady
increase over the 5 years period from 18.00% in 2010 to 24.29%
in 2014 providing evidence that the business is efficient in
converting sales to profit.
There was a decrease in Return on Assets from 13.11% in 2013
to 12.65% in 2014. This occurred after an initial and steady
increase from 9.77% in 2010. This suggests that the decrease in
net income might have had a negative impact on the company’s
earnings on investments. This may also suggest that the
company did not utilise its assets efficiently during the period
of decline.
The Asset Turnover fluctuated during the period showing a
decline from 0.54 in 2010 to 0.52 in 2014. The low asset
turnover can be attributed to ineffective use of the company’s
assets.
More so, as seen in the horizontal trend analysis, operating
profits increased steadily during the period. This might be
attributed to the movement in sales which fluctuated over the
years. Similarly, the costs of sales show a corresponding
movement with sales during the period. This increase in cost of
sales may be due to raw material prices and cost of labour.
Other factors to consider are production costs, selling price and
appropriate sales mix.
Financial Ratio Analysis - Liquidity
We can measure the short term solvency of Reed Elsevier Plc
using liquidity ratios. Under this we can estimate the current

ratio as the ratio of current assets to current liabilities. This
measures the extent to which current assets cover current
liabilities. When compared to the industrial benchmark of 1:1,
the result suggests that Reed Elsevier Plc has a weak current
ratio of 0.66:1 in 2010 that has deteriorated in subsequent years
to 0.49:1 in 2014. This means the company might not be able to
meet its current liabilities as they fall due. However the result
might be due to the nature of its business as a publishing
company requiring it to carry high inventory to meet fluctuating
demand.
The acid test ratio measures the ability of a firm to cover its
immediate liabilities using its short term assets. As shown in
appendices 1 Reed Elsevier Plc have been operating on a low
acid test ratio ranging from 0.60:1 in 2010 to 0.46:1 in 2014,
this ratio is considered low when compared to the average
benchmark of 0.75: 1.25. However it should be noted that the
low acid test ratio does not suggest insolvency but reflect the
need of carrying high inventory required for operations. The
acid test ratio of competitors should be considered in order to
make appropriate decision.
Financial Ratio Analysis- Efficiency
A close look at the inventory turnover shows that it has been
decreasing steadily over the years (2010-2013) but increased
marginally by 5.30% in 2014 which shows that the company
might be making effort to manage its inventory efficiently. The
implication of a high inventory turnover ratio shows that the
firm is holding a low level of average inventory in relation to
sales. The decrease in inventory turnover to 25.84 days in 2014
shows that the company may be holding inventory, this means
money is tied up in stock, this money could have earned interest
in the bank, items in inventory also carry storage cost, and risk
of getting bad. It is recommended that the company adopts a
stock policy that will save future costs and improve earnings.
Payables payment period measures the number of days Reed
Elsevier Plc takes to settle account payables. The ratios
computed are well above the industrial average benchmark of 45

– 60 days. The payables payment period as at 2014 is 479.63
days, suggesting that Reed Elsevier has been inefficient in
managing its account payables. However this figure should not
be considered in isolation but should be compared to that of
Reed Elsevier competitors in order to make effective decisions.
Trade receivable period is the number of days through which
the company receives cash from its debtors. As shown in our
calculation, the Trade receivable period is 94.02 days in 2014.
A lower number of days signify that the company is managing
account receivables effectively. It should be noted that a stiff
policy on trade payables which is not favourable to suppliers
may lead to loss of suppliers’ goodwill and ultimately cause
business failure. Furthermore, it can be deduced that both the
trade payables and receivable collection days are above the
benchmark of (45-60 days) and 55 days. However the
management of Reed Elsevier Plc need to compare results with
that of similar sized competitors in order to make adequate
financial decisions.
Cash cycle is the length of time, in days, that it takes for a
company to convert purchased inventory into cash flows. Reed
Elsevier has had a high negative cash cycle of (324.63) to
(359.77) days during the five years period. This suggest that
they do not pay for their inventory or materials until after they
have sold the final product associated with them. It means that
working capital is being used as efficiently as possible and have
available cash for other things. Negative cash cycle has the
following disadvantages; unsatisfied creditors, Loss of revenue,
Loss of market share, Deprive entity from growing in new
markets as receivables period is short and payment period is
long. Customers won’t be happy as they do not have facility of
reasonable credit term and creditors won’t trust because of long
payment time.
Financial Ratio Analysis- Gearing
The gearing ratio of Reed Elsevier Plc shows the proportion of
debt to equity. This figure shows a fluctuating trend over the 5

year period. In 2010 the gearing ratio was 59.25%, this
increased to 60.49% in 2011 and decreased within the
subsequent years to 54.85% and 49.39% respectively. In the
final year of analysis, it increased to 53.49%.
Generally, the gearing of Reed Elsevier Plc is higher than the
industrial benchmark of 33-47% which suggests that the
company is highly geared and is relying heavily on debt. The
effect of this is a default risk which may affect its operations
and high interest rate attached to borrowing.
The decrease in gearing ratios in 2011 and 2012 may have been
as a result of Reed Elsevier repaying some of its debt as seen in
the statement of financial position. This might be a step to
improving its gearing position.
Elsevier Plc adopts a hedging technique that minimises price
fluctuations and losses.
Conclusion and Recommendations
Based on the results of our analysis, the acid test ratio and
current ratio suggests that the liquidity position of Reed
Elsevier Plc is too low, implying that it may have difficulty in
meeting its financial obligations. In order to resolve this, it is
recommended that the companies increase their level of current
assets by increasing equity. There is also a high need for costs
control and cash flow improvement. As shown in the profit
statement, revenue fluctuated over the years and decreased by
4.54% in 2014 to £5,775m. One major area of concern is the
management policy regarding trade payables periods and
receivables collection period. For instance the payable payment
days in the final year of analysis was 479.63 days while the
receivable collection days for corresponding period was 94.02
days. Long payable payment days will lead to a strain in
suppliers’ relationship. This indicates that Reed Elsevier Plc
maintains a strict cash flow policy that allows a lengthy period
of time before creditors are settled. While this might be suitable
for Reed Elsevier business in the short run, it may need to be

reviewed to improve relationships with stakeholders and ensure
continued loyalty. However this figure should be compared with
the activities of competitors to make the best financial decision.
Overall, as a publicly quoted company Reed Elsevier has
performed well in boosting its earnings and this may result in
increased investors’ confidence and customers’ loyalty.
A close look at the statement of financial position reveals that
Reed Elsevier Plc has a trend of negative reserve balances; this
might have resulted from the accounting method adopted in
posting the balances. It could also be as a result of severe
depreciation in currency position or significant adjustments to
intangible assets. Whatever the case may be, the management
must ensure these reserves are carefully investigated and
appropriate actions taken to remedy the situation.
Furthermore, it is important to cut down on operating costs to
ensure continued profitability. Also, the inventory management
policy needs to be reviewed to check inefficiency and reduce
wastes. Working capital should also be managed properly to
avoid supplier relationship being strained.
Other points to note is the control of finance costs and other
long term liabilities, this may be having an adverse effect on
Reed Elsevier Plc operations if not properly monitored and
hedged. Overall the business need attention regarding price
fluctuations and operating costs and need to consider managing
its current liabilities efficiently to enable it meet its obligations.
However, it should be noted that ratio analysis is not the only
tool of measurement on which financial decisions is based,
other qualitative factors should be considered to make effective
decisions.
S15133805 Page 14 of 14
Appendix 1 – Financial Ratio

Financial Ratio Analysis
Ratio
Formulae
Metrics
2014
2013
2012
2011
2010
Profitability
Overall ROCE
PBIT x100
%
26.52%
27.22%
24.34%
21.92%

18.94%
Cap Employed
Return on Assets
PBIT x100
%
12.65%
13.11%
12.10%
10.48%
9.77%
Total Assets

Asset Turnover
Revenue
x
0.52
0.58
0.56
0.52
0.54
Total Assets

Net profit
NP before in
t and tax x100
%
24.29%
22.80%
21.80%
20.08%
18.00%
margin
Revenues
Gross Profit
Gross profit x 100
%
65.25%
64.90%
65.03%

64.58%
63.52%
margin
Revenues
Liquidity
Current
current assets /
x:1
0.49
0.47
0.57
0.58
0.66
ratio
current liabilities

Acid test
Current assets - inventories
x:1
0.46
0.43
0.53
0.53
0.60
ratio
current liabilities

Efficiency
Receivables
Trade receivables x365
days
94.02
85.64
82.36
90.12
88.91
collection period
Sales
Payables
Trade payables x 365
days
479.63
447.20
434.12

456.16
426.96
payment period
cost of sales
Inventory
Closing Inventory. x 365
days
25.84
24.47
27.13
32.62
37.67
turnover
cost of sales

Growth
Gearing
Fixed interest capital x 100
%
59.57%
52.08%
57.74%
60.03%
65.77%
capital employed

Cash cycle
Inventory turn
Days
25.84
24.47
27.13
32.62
37.67
Receivables period
Days
94.02
85.64
82.36
90.12
88.91
Payables period
Days
479.63
447.20
434.12
456.16
426.96

Cash cycle
Days
-359.77
-337.09
-324.63
-333.42
-300.38
Appendix 2
Vertical analysis
Reed Elsevier Plc
Comprehensive Statement of Income
2014
2013
2012

2011
2010
for year ended 31st December
m
m
m
m
m
Revenue
100%
100%
100%
100%
100%
Cost of sales
34.75%
35.10%
34.97%
35.42%
36.48%
Gross profit
65.25%
64.90%
65.03%
64.58%

63.52%
Selling and distribution costs
16.18%
16.65%
16.60%
17.91%
18.02%
Administration and other expenses
25.41%
25.93%
27.03%
27.09%
27.86%
Operating profit before joint ventures
23.66%
22.32%
21.40%
19.58%
17.63%
Share of profits of joint ventures
0.62%
0.48%
0.39%
0.50%
0.36%
Operating profit
24.29%
22.80%

21.80%
20.08%
18.00%
Finance income
0.12%
0.17%
0.26%
0.28%
0.13%
Finance costs
2.93%
3.41%
3.97%
4.20%
4.69%
Profits/Losses from disposals
-0.19%
0.27%
0.74%
-0.37%
-0.76%
Profit before tax
21.29%
19.82%
18.82%

15.79%
12.68%
Income Tax
4.66%
1.34%
1.67%
3.02%
1.98%
Profit after tax
16.63%
18.48%
17.15%
12.78%
10.70%
Appendix 3
Vertical trend Analysis
Reed Elsevier Plc
Comprehensive Statement of Position

as at 31st December
2014
2013
2012
2011
2010
m
m
m
m
M
Non-current assets
Goodwill

44.93%
43.60%
41.27%
41.11%
39.80%
Intangible assets
28.54%
29.77%
29.73%
30.37%
30.98%
Investments in joint ventures
1.13%
1.19%
0.91%
1.08%
1.22%
Other investments
1.10%
0.88%
0.72%
0.56%
0.43%
Property, plant and equipment
2.05%

2.26%
2.40%
2.50%
2.61%
Pension assets
0
0
0
0
0.49%
Deferred tax assets
4.19%
4.21%
0.72%
1.84%
1.35%
Derivative financial instruments
0.70%
0.61%
1.25%
0
0
Total Non-Current Assets
82.54%
82.52%
76.99%
77.47%

76.89%
Current assets
Inventories
1.28%
1.35%
1.44%
1.65%
2.04%
Trade and other receivables
13.41%
13.49%
12.53%
12.89%
13.22%
0.28%
1.18%
0.52%
1.30%
1.20%
Cash and cash equivalents

2.49%
1.26%
5.82%
6.31%
6.65%
Total Current Assets
17.46%
17.28%
20.31%
22.15%
23.11%
Assets held for resale
0
0.20%
2.69%
0.38%
0
Total Assets
100%
100%
100%
100%
100%

Capital and reserves
Ordinary share capital *
1.91%
2.13%
2.02%
1.94%
2.01%
Share Premium
25.44%
27.51%
24.76%
23.67%
24.68%
Shares held in Treasury
-0.10
-13.95%
-8.16%

-5.50%
-6.07%
Currency translation reserve
0.66%
-1.31%
-0.21%
0.77%
0.26%
Other reserves
0.97%
8.38%
2.29%
-1.73
-3.47%
Shareholders’ Equity
19.00
22.77%
20.70%
18.88%
17.41%
Minority Interests
0.28%
0.31%
0.31%
0.22%
0.24%

Total Equity
19.27%
23.09%
21.01%
19.10%
17.66%
Non- Current Liabilities
0.64%
0.12%
0
0
0
Loans

28.40%
25.01%
28.71%
28.69%
33.93%
Deferred Tax Liabilities
9.52%
10.25%
8.34%
10.75%
10.69%
Net pension obligations
5.70%
3.61%
4.23%
2.10%
2.02%
Provisions
0.94%
1.11%
1.26%
0.76%
0.79%
Liabilities associated with assets held for sale
0.02%
0.03%

0.87%
0.15%
0
Total non-current liabilities
45.22%
40.20%
43.42%
42.44%
47.42%
Current Liabilities
Trade and other payables
23.78%
24.73%
23.10%

23.10%
23.16%
0.21%
0.04%
0.10%
0.60%
0.72%
Borrowings
6.10%
6.17%
6.63%
8.54%
4.62%
Taxation
5.25%
5.60%
5.47%
5.89%
5.79%
Provisions
0.17%
0.16%
0.27%
0.34%

0.64%
Total current liabilities
35.50%
36.70%
35.57%
38.46%
34.93%
Total liabilities
80.73%
76.91%
78.99%
80.90%
82,34%

Total Equity and Liabilities
100%
100%
100%
100%
100%
Horizontal Analysis
Appendix 4
Reed Elsevier Plc
Comprehensive Statement of Income
2014
2013
2012
2011
2010

for year ended 31st December
m
m
m
m
m
Revenue
95.34%
99.67%
101.01%
99.12%
100%
Cost of sales
90.81%
95.88%
96.83%
96.24%
100%
Gross profit
97.95%
101.85%
103.41%
100.78%
100%
Selling and distribution costs

85.61%
92.12%
93.03%
98.53%
100%
Administration and other expenses
86.96%
92.77%
97.98%
96.38%
100%
Operating profit before joint ventures
127.90%
126.12%
122.57%
110.02%
100%
Share of profits of joint ventures
163.64%
131.82%
109.09%
136.36%
100%
Operating profit
128.62%
126.24%
122.29%
110.55%

100%
Finance income
87.5%
125%
200%
212.5%
100%
Finance costs
59.51%
72.54%
85.56%
88.73%
100%
Profits/Losses from disposals
-23.91%
34.78%
97.83%
47.83%
100%
Profit before tax
160.03%
155.73%
149.87%
123.44%
100%

Income Tax
224.17%
67.5%
85%
150.83%
100%
Profit after tax
148.15%
172.07%
161.88%
118.36%
100%
Appendix 5
Horizontal Analysis
Reed Elsevier Plc
Comprehensive Statement of Position

as at 31st December
2014
2013
2012
2011
2010
m
m
m
m
M
Non-current assets
Goodwill
112.16%

103.04%
102.34%
106.49%
100%
Intangible assets
91.52%
90.37%
94.74%
101.07%
100%
Investments in joint ventures
91.91%
91.91%
73.53%
91.18%
100%
Other investments
233.33%
191.67%
164.58%
133.33%
100%
Property, plant and equipment
78.01%
81.44%
90.72%
98.97%

100%
Pension assets
0%
0%
0%
0%
100%
Deferred tax assets
307.28%
292.72%
52.32%
140.40%
100%
56.52%
46.38%
100%
0%
0%
Total Non-Current Assets
106.67%
100.94%
98.85%
103.87%
100%
Current assets

Inventories
62.28%
62.28%
69.74%
83.33%
100%
Trade and other receivables
100.81%
96%
93.56%
100.54%
100%
23.13%
92.54%
42.54%
111.19%
100%
Cash and cash equivalents
37.20%
17.79%

86.39%
97.84%
100%
Total Current Assets
75.07%
70.34%
86.74%
98.80%
100%
Assets held for resale
0
47.73%
675%
100%
0
Total Assets
99.36%
94.06%
98.71%
103.09%
100%

Capital and reserves
Ordinary share capital *
94.64%
100%
99.55%
99.55%
100%
Share Premium
102.40%
104.83%
99.02%
98.87%
100%
Shares held in Treasury
(163.52%)
(216.25%)
(132.79%)
(97.93%)
(100%)
Currency translation reserve

255.17%
(472.41%)
(79.31%)
303.45%
100%
Other reserves
27.65%
227.39%
65.12%
51.42%
(100%)
Shareholders’ Equity
100.39%
123.01%
117.34%
111.79%
100%
Minority Interests
114.81%
122.22%
125.93%
92.59%
100%
Total Equity

108.48%
122.99%
117.46%
111.52%
100%
Non- Current Liabilities
546.15%
100%
0
0
0
Loans

83.17%
69.55%
83.52%
87.16%
100%
Deferred Tax Liabilities
88.59%
90.27%
77.10%
103.69%
100%
Net pension obligations
280.89%
168.44%
207.11%
107.56%
100%
Provisions
118.18%
131.82%
157.95%
98.86%
100%
Liabilities associated with assets held for sale
11.76%
17.65%
564%
100%
0

Total non-current liabilities
94.76%
79.76%
90.38%
92.27%
100%
Current Liabilities
Trade and other payables
102.01%
100.43%
98.45%
102.83%
100%

28.75%
5%
13.75%
86.25%
100%
Borrowings
131.01%
125.58%
141.47%
190.31%
100%
Taxation
90.09%
91.02%
93.34%
104.80%
100%
Provisions
26.76%
23.94%
42.25%
54.93%
100%
Total current liabilities

101.00%
98.85%
100.54%
113.52%
100%
Total liabilities
97.41%
87.85%
94.69%
101.28%
100%

99.36%
94.06%
98.71%
103.09%
100%
senseInfoselectionIndexcheckSelectedbookNamesheetNamecell
AddressrangeAddressanalysisStringminPercentmaxPercentminV
aluemaxValuebaseValuenumIntervalsvaryWhenSteppingisInputg
roupCountgroupIndexformulaIndexioIndexintIndexintervalMode
useCellBasetableRange00senseTotal:
1.selectionIndexcheckSelectedbookNamesheetNamecellAddressr
angeAddressanalysisStringminPercentmaxPercentminValuemax
ValuebaseValuenumIntervalsvaryWhenSteppingisInputgroupCo
untgroupIndexformulaIndexioIndexintIndexintervalModeuseCell
BasetableRange1TRUE0Finally retired10%$D$11Range:
$L$17:$L$26-
10.00%10.00%0.1510TRUEFALSE1010Contribution
percentage0.150006TRUE'[My Modeling retirement
plan.xlsx]Finally retired'!$L$17:$L$26-0.1-
6.66666666666667E-02-3.33333333333333E-
0203.33333333333333E-026.66666666666667E-
020.10.130.140.150.160.170.180.190.20.210.22Range:
0.13Range: 0.14Range: 0.15Range: 0.16Range: 0.17Range:

0.18Range: 0.19Range: 0.20Range: 0.21Range: 0.22
Question 7Question 8 ( 4 points)Problem: Calculate the
retirement age and the total worth of your retirement fund upon
your retirement given the following info. You are 32 years old
now and the retirement age in your country is 65, but there is a
75% chance that it will be changed to 72 years. You contribute
10% of your salary to the retirement fund each year. Your
annual salary this year is $75,000, and you expect it to increase
by a growth rate per year governed by a Lognormal(5%,10.5%)
distribution in real terms (above inflation). You estimate that
the return on the pension fund will be minimum 2%, most likely
3.5% and maximum 7% (assuming a Pert distribution).Your age,
years32msAnnual salary$75,000Annual
increase5.0%10.5%Contribution percentage10%Retirement age
in years65minmlmaxRetirement age if changed, years72Pension
fund's return per year2.0%3.5%7.0%Probability of the
change75%Retirement ageTotal worthAgeYearAnnual
salaryContributionPension's fund returnContribution
(accrued)321$75,000$7,50033343536373839404142D19D10
Author: Author:
Reference formual from D1943E19D19*$D$11
Author: Author:
Reference formula from E 1944F19
Author: Author:
Reference formula from F1945G19
Author: Author:
Reference formula from G 194647Choose the following
Simulation Settings:48Iterations: 5,00049Simulations:
150Sampling Type: Latin Hypercube51Simulation not Running,
Distributions return=Static Values then When RiskStatic is not
defined use Expected Values52Generator: Marsenne
Twister53Initial seed: 1 All use same

seed.54Collect distribution samples: All55Smart sensitivity
analysis: Enabled5657Run a Monte Carlo simulation using
@Risk and interpret the results:58591. Show the Simulation
Setting windows (Screenshots) and Generate and attach all
@Risk Outputs Excel Reports:60Quick reports, Input & Output
Results Summary, Detailed Statistics (Screenshots)61622. What
are the Mean, St Dev, Min and Max63MeanSt
DevMinMax64653. Show the Output Histogram (Screenshots)66
What is the probability that the total accumulated worth upon
retirement will be higher than the contribution. 67684. What
percentage of your salary you should put aside to achive a
$2,500,000 at retirement.69705. Given the assumptions
mentioned in the problem, at what age you will achieve 71the
same $2,500,000 upon retirement.727374Add your output
results windows to this workbook:75767778798081828384
Indicative marking guide
Fail
(0%-49%)
Pass
(50%-59%)
Commendation
(60%-69%)
Distinction
(70%-100%)
Question 1
A lack of breadth and depth of financial analysis techniques
accompanied by incorrect formulae or calculation without
appropriate explanation.
Poor layout or presentation in anything other than business
report style. Inadequate grammar and lacking in overall
knowledgeable synthesis.
Evidence of some financial analysis techniques but with errors
of formulae and calculation with insufficient explanation and
adequate presentation.

Attempt at a business report format with some supportive
appendices. Mainly descriptive with some attempt at synthesis.
Grammar and structure being adequate.
Wide range of financial analysis techniques evident and
supported by full disclosure of formulae and accurate
calculation in a clear format.
Presented in business report format and coherently structured.
Supported by referenced appendices. Effective and well-
reasoned narrative discussion.
An excellent range of financial analysis techniques which are
supported by full disclosure of formulae and accurate
calculation in a clear format.
Excellent business report format and well structured. Supported
by fully referenced appendices. Excellent analytical and
justified explanations showing synthesis and application.
Question 2
A lack of understanding of management accounting and decision
making. Unable to produce the correct format and calculations.
Limited or no narrative discussion or recommendations and
conclusions. Poor academic writing and referencing.
Ability to apply some management accounting decision making
techniques. Demonstrates an adequate understanding of the
principles and techniques involved. Reasonable attempt at
analysis and discussion of findings, though of limited depth.
A good application of management accounting for decision
making. Demonstrates a good understanding of the principles
and techniques involved. Good analysis and discussion of
findings, with good use of academic references which support
clear and well explained conclusions.
Excellent application and understanding of management
accounting for decision making. Thorough and detailed critical
discussion with excellent use of a range of academic references
which support clear, practical, and well explained
recommendations and conclusions.
Question 3

A lack of understanding of the topic and the related literature.
Limited or no narrative discussion or recommendations and
conclusions. Poor academic writing and referencing.
Ability to research and apply theory to a reasonable degree.
Demonstrates the ability to critically evaluate and make the
appropriate conclusions. Reasonable attempt at analysis and
discussion of findings, though of limited depth.
A good understanding of the topic. Demonstrates a good
understanding of the principles and techniques involved. Good
analysis and discussion with good use of academic references
which support clear and well explained conclusions.
Excellent understanding of the topic. Thorough and detailed
critical discussion with excellent use of a range of academic
references which support clear, practical, and well explained
recommendations and conclusions.
Question 1
Presented below are the simplified Consolidated Statement of
Comprehensive Income and Consolidated Statement of Financial
Position of BT Group plc for the financial years 2015 to 2017.
Required
Prepare a business report for the attention of the board of
directors which analyses the performance and financial position
of BT Group plc over the financial years 2015 to 2017 and
recommend any action the board should take.
Your report should utilise key ratios, horizontal and vertical

analysis and include in-depth critical discussion with
appropriate academic references.
Marking guide
Financial analysis (using 4 categories of ratios and vertical and
horizontal trend analysis) Vertical trend analysis 4
marks
Horizontal trend analysis 4 marks
Profitability ratio analysis 6 marks
Liquidity ratio analysis 6 marks
Efficiency ratio analysis 6 marks
Gearing ratio analysis 6 marks
________
Total for analysis 32 marks
32 marks
Interpretation with academic references
Vertical analysis narrative 1 marks
Horizontal analysis narrative 1 marks
Profitability narrative 2 marks
Liquidity narrative 2 marks
Efficiency narrative 2 marks
Gearing narrative 2 marks
________
Total for interpretation 10 marks
10 marks
Conclusions and recommendations 6
marks
Layout, structure, grammar and referencing
2 marks

Total 50 marks
BT Group plc
Statement of Comprehensive Income 201720162015
for the Year ended 31
st
March£m£m£m
Revenue
24,06219,01217,968
Operating costs(20,895)(15,399)(14,566)
Operating profit / (loss)3,1673,6133,402
Finance expense (817)(749)(876)
Finance Income133717
Net finance expense(804)(712)(859)
(9)6(1)
0025
Profit / (Loss) before taxes (PBT)2,3542,9072,567
Taxation(446)(441)(510)
Profit for the year1,9082,4662,057
(2,164)698(794)
(256)3,1641,263
Earnings per share (EPS)
Basic19.2%28.5%25.5%
Diluted19.1%28.2%25.1%
Share of post tax loss of associates and joint
Profit on disposal of interest in associates and
Other comprehensive (loss) income for the
Total comprehensive (loss) income for the
Sheet1BT Group plcStatement of Comprehensive Income
201720162015for the Year ended
31stMarch£m£m£mRevenue24,06219,01217,968Operating
costs(20,895)(15,399)(14,566)Operating profit /
(loss)3,1673,6133,402Finance expense (817)(749)(876)Finance
Income133717Net finance expense(804)(712)(859)Share of post
tax loss of associates and joint ventures(9)6(1)Profit on disposal

of interest in associates and joint ventures0025Profit / (Loss)
before taxes
(PBT)2,3542,9072,567Taxation(446)(441)(510)Profit for the
year1,9082,4662,057Other comprehensive (loss) income for the
year, net of tax(2,164)698(794)Total comprehensive (loss)
income for the year(256)3,1641,263Earnings per share
(EPS)Basic19.2%28.5%25.5%Diluted19.1%28.2%25.1%
BT Group plc
Statement of Financial Position201720162015
as at 31st March
£m£m£m
Non-current Assets
Intangible assets15,02915,4503,170
Property, plant and equipment16,49815,97113,498
Derivative financial instruments1,8181,4621,232
Investments444644
Associates and joint ventures312426
Trade and other receivables360218179
Deferred tax assets1,7171,2471,559
Total Non-Current Assets35,49734,41819,708
Current Assets
Programme rights264225118
Inventories22718994
Trade and other receivables3,8353,9783,093
Current tax receivable736565
Derivative financial instruments42817797
Investments1,5202,9183,523
Cash and cash equivalents528996848
Total Current Assets6,8758,5487,838
Total Assets
42,37242,96627,546
Equity
Ordinary shares499499419
Share premium1,0511,0511,051
Own shares(96)(115)(165)
Merger reserve6,6478,422998

Other reserves884685502
Retained loss(650)(430)(2,124)
Total Equity8,33510,112681
Non-Current Liabilities
Loans and other borrowings10,08111,0257,862
Retirement benefit instruments9,0886,3827,583
Other payables1,2981,106929
Deferred tax liabilities1,2401,262948
Provisions536565422
Total Non-Current Liabilities23,11221,20318,671
Current Liabilities
Loans and other borrowings2,6323,7362,314
Trade and other payables7,4377,4185,348
Current tax liabilities197271222
Provisions625178142
Total Current Liabilities10,92511,6518,194
42,37242,96627,546
Sheet1BT Group plcStatement of Financial
Position201720162015as at 31st March£m£m£mNon-current
AssetsIntangible assets15,02915,4503,170Property, plant and
equipment16,49815,97113,498Derivative financial
instruments1,8181,4621,232Investments444644Associates and
joint ventures312426Trade and other
receivables360218179Deferred tax assets1,7171,2471,559Total
Non-Current Assets35,49734,41819,708Current
AssetsProgramme rights264225118Inventories22718994Trade
and other receivables3,8353,9783,093Current tax
receivable736565Derivative financial
instruments42817797Investments1,5202,9183,523Cash and cash
equivalents528996848Total Current
Assets6,8758,5487,838Total
Assets42,37242,96627,546EquityOrdinary
shares499499419Share premium1,0511,0511,051Own

shares(96)(115)(165)Merger reserve6,6478,422998Other
reserves884685502Retained loss(650)(430)(2,124)Total
Equity8,33510,112681Non-Current LiabilitiesLoans and other
borrowings10,08111,0257,862Derivative financial
instruments869863927Retirement benefit
instruments9,0886,3827,583Other
payables1,2981,106929Deferred tax
liabilities1,2401,262948Provisions536565422Total Non-Current
Liabilities23,11221,20318,671Current LiabilitiesLoans and
other borrowings2,6323,7362,314Derivative financial
instruments3448168Trade and other
payables7,4377,4185,348Current tax
liabilities197271222Provisions625178142Total Current
Liabilities10,92511,6518,194Total Equity and
Liabilities42,37242,96627,546

To Board of Directors of Reed Elsevier Plc.From Report.docx

Recommended

Recommended

More Related Content

Similar to To Board of Directors of Reed Elsevier Plc.From Report.docx

Similar to To Board of Directors of Reed Elsevier Plc.From Report.docx (20)

More from herthalearmont

More from herthalearmont (20)

Recently uploaded

Recently uploaded (20)

To Board of Directors of Reed Elsevier Plc.From Report.docx