firm analysis

Masters Programmes
Assignment Cover Sheet
Submitted by: 1566003
Date Sent: 05/09/2016
Module Title: Business in Practice
Module Code: IB9FB0
Date/Year of Module: 2016
Submission Deadline: 07/09/2016
Word Count: 4037
Number of Pages: 22
Question: Firm Analysis; Financial and Strategy Analysis of Jaguar Land Rover
“This is to certify that the work I am submitting is my own. All external references and
sources are clearly acknowledged and identified within the contents. I am aware of the
University of Warwick regulation concerning plagiarism and collusion.
No substantial part(s) of the work submitted here has also been submitted by me in
other assessments for accredited courses of study, and I acknowledge that if this has
been done an appropriate reduction in the mark I might otherwise have received will be
made.”

1566003
2
Table of Contents
ASSIGNMENT COVER SHEET .........................................................................................................1
INTRODUCTION ...........................................................................................................................3
FINANCIAL ANALYSIS....................................................................................................................3
CONTEXT ...........................................................................................................................................3
OVERVIEW OF THE FINANCIALS.......................................................................................................5
RATIOS ...............................................................................................................................................6
IMPLICATION OF ‘BREXIT’ ON JAGUAR LAND ROVER REVENUE..................................................10
EVALUATION ...................................................................................................................................10
STRATEGY ANALYSIS ..................................................................................................................11
IMPLICATION OF BREXIT ON STRATEGY .......................................................................................15
RECOMMENDATION AND CONCLUSION .....................................................................................16
REFERENCE ................................................................................................................................17
APPENDICES ..............................................................................................................................21

1566003
3
Introduction
Jaguar Land Rover is a British multinational luxury automotive company purchased by India’s
Tata group from Ford in 2008. The company is built around two brands, land rover a leading
premium all wheel drive vehicle and jaguar a luxury sports saloon and sports car marques. The
firm has been successful seeing five consecutive years of growth with 80% of its vehicles sold
abroad.
There are two major functional areas of interest that this report examines. One is the financial
aspect which could become a challenge if not properly managed, the other is strategy; an area
where the firm seems to be doing well. The financial analysis is done using the CORE (context,
overview, ratios and evaluation) approach. This represents the context in which the firm
operates, an overview of its finances, relevant ratios (that show the firm’s profitability, its
capacity to meet its short and long term commitments (liquidity and solvency), efficiency and
investors viewpoint) and lastly the evaluation which states the implication of JLR’s financial
health.
Strategy on the other hand is examined by first analysing the industry’s competitiveness using
the five forces and then looking at what strategy JLR executes amidst these forces, the fit
between this strategy and its subsidiary level strategy and finally its expansion strategy.
Financial analysis
Context
The context could also refer to the environment in which the firm operates, this could be
divided into the external, internal and the competitive environment. Identifying the past,
present and future factors in the external environment establishes the relevance of the PEST
framework, other important factors in the internal and competitive environment have also been
discussed all in relation to the finances of the firm.

1566003
4
Political/Legal
One major issue which could be characterised as political and legal that is forecasted to affect
Jaguar Land rover is Britain’s vote to leave the EU, this would affect the firm in the form of
tariffs on imported components and exported cars, more of this is explicitly discussed
subsequently. The European laws on fuel emissions is another legal issue that has affected JLR,
the firm stopped its production of the defender model last year because it did not meet the
aforementioned laws (Plisner, 2016). Although this may not not have affected JLR’s revenue
significantly as it is not one its mainstream, it would have a little effect until the model is
replaced this year.
Economic
A drop in sales in China due to accelerated slowing of economic conditions is one of many
issues that hit the firm in the last 2015/16 fiscal year. Also, the Tianjin explosions in August
2015 which transformed into an economic loss affected JLR, the firm had about 5800 cars at
the port as at the time of the explosion which were either destroyed or damaged and although
JLR is not certain what insurance and recoveries would be, it is going to make a one-time
exceptional charge of about £245m in Q2 of fiscal year 2016 (jaguarlandrover.com, 2016).
Social
There is a trend of more people getting interested in luxury brands, this is increasingly common
in China where the affluent middle class tend to spend more. According to Phillips and West,
(2015), this trend has been the reason for JLR’s sales increase in China in previous years.
Technological
Technological advancement and the internet are setting new grounds for competition and in a
bid to stay competitive, there are signs that JLR is investing heavily in R&D to launch its first
electric car next year (Cuff, 2016). JLR has also developed cutting edge technology in the area
of virtual engineering (3D design rooms and printers) and virtual customer experience.

1566003
5
Table 1. Internal and competitive environment
Internal factors Competition
Research &
development
Human resource
management
Supply chain Together with its
parent company, it
has the second
largest market share
of 29% in UK.
Its style and
functionality driven
by technology and
research and
development sets it
apart from some of
its competitors such
as Porsche, BMW,
Daimler-Benz and
Audi.
JLR has increasingly
invested in R&D, its
investment is more
than any other
automotive
manufacturer in the
UK. It also
capitalizes it by
treating it as an
income and an asset
rather than an
expense as shown in
the income
statement (10) and
balance sheet (17).
Its most recent
research is on
electric cars.
The firm gives
benefits to its
employees in the
form of discounted
rate for cars and free
cars to senior
executives.
JLR also invests
£100m a year in JLR
learning academy to
help its employees
develop their
careers.
The firm pays DHL
to ensure on time
and accurate
delivery of its parts
that cannot be stored
due to size every
two hours.
More so, the firm
claims to operate a
‘produce on order
basis’ which would
reduce its cost on
storage of
components.
Overview of the financials
The income statement shows that the firm is profitable, while revenue has increased by 1.6%,
profit has dropped by 40% (from £2614m to £1557m) between 2015 and 2016. The drop in
profit is due to increase in employee cost, other expenses and depreciation and amortization all
of which are related to its expansion. This shows revenue increases shouldn’t be examined in
isolation but in relation to cost and profit.
Non current assets such as property, plant and equipment has seen a significant increase of
about 91.6% (from £2,335 million to £4,474 million) between 2013 and 2015, it has also
increased in 2016 by 16%. Although, there is a lesser rate of increase in revenue and profit
accounted for by this, it is probably again a reflection of expansion especially the new plant in
China in 2014 as a larger part of that increase is between 2014 and 2015.

1566003
6
There has also been a notable increase in long term borrowing between 2014 and 2015 of about
29% (from £1,843 to £2,381) than between 2013 and 2014 (0.2%, from £1,839 to £1,843).
Short term borrowings also dropped drastically between 2013 and 2014.
While inventory and creditors have increased by 11% and 6% respectively, debtors have
dropped by 3% between 2015 and 2016, a drop from the previous years. These are indicators
of more goods for sale, more credit purchase and less payment yet to be received. Below is a
diagram showing the financial trend of key measures. PAT is profit after tax and PPE is
property, plant and equipment.
Ratios
Table 2. Profitability ratios
The ROCE which measures profitability in terms of capital employed and profits saw an
increase in 2014 but dropped significantly in 2016 as a result of a reduced PBIT. Prior to 2016,
0
5000
10000
15000
20000
25000
2013 2014 2015 2016
Figure 1. financial trend of key measures
Revenue PAT PPE
years
For the year ended march: 2013 2014 2015 2016
ROCE (%) 24.4 28.1 24.4 12.2
ROSF (%) 34.3 32 33.7 17.2
Gross profit margin (%) 37.3 38.5 39.7 40.1
Expenses/sales (%) 32.6 32.2 33.3 39.3
Net margin (%) 10.6 13.7 12.4 7.0
Asset utilization 2.31 2.05 1.97 1.75
£m

1566003
7
2015’s PBIT increased at a reduced rate of 2% compared to the 59% increase in 2014. This
increase difference is not from the revenue or cost of sales as the gross profit margin shows an
increasing rate. It is from the expenses in relations to sales which has the highest figure in 2016.
Both the ROCE and ROSF show that the firm is doing well in returning output for input except
for 2016.
In addition, for every pound of sales, an average of 10.9p is left as profit after deducting
expenses as shown by the net margin. Asset utilization is fairly stable.
Table 3. Liquidity and solvency
Current ratio over the years is greater than one which shows that current assets is greater than
current liabilities. This is typical of a manufacturing firm because it holds inventory of raw
materials, work in progress and finished goods which increases the current asset unlike a
grocery store.
The quick ratio compares current assets excluding inventories to current liabilities and reveals
that the former does not cover the later but this is not likely a problem. Interest cover fell
drastically in 2014 which is due to increased debt thus the rate at which the firm could easily
pay its interest has reduced nonetheless the current figures are satisfactory.
Although there is an increase in debt, the rate at which the business is funded by debt compared
to owner’s equity has reduced as shown by the gearing percentage. The firm has to keep this
low because it would have to pay interest irrespective of sales.
Current ratio 1.04 1.18 1.13 1.14
Quick ratio/acid test 0.74 0.82 0.80 0.80
Gearing (%) 61.2 34.3 42 32.7
Interest cover (times) 92.7 14.4 20.1 17.6

1566003
8
Table 4. Working capital
The stock days shows how long the firm takes to sell its inventory, the inventory figure used
covers raw materials and consumables, work in progress and finished goods. The stock days
for finished goods is moderate but it is still in contrast with their policy of producing based on
orders, there should be other reasons for this.
The debtor days is low and satisfactory while the high creditor days indicate a longer time to
pay suppliers.
An investors viewpoint
Table 5. Investment ratios
JLR is not listed on the London stock exchange or any stock market although it is a public
limited company. Jaguar’s listing was removed from the LSE after it was bought over by ford
in 1990, most of the shareholders in the firm are early shareholders in the company. It not being
listed also means it doesn’t have a share price hence the dividend yield ratio (which compares
the annual dividend to the share price) and price earnings ratio are not presented. Those
parameters are also not an appropriate way to evaluate the firm since it isn’t listed and the
decisions concerning dividends are probably made by a few shareholders within the firm.
Earnings per share has been on the increase and is a good indicator to shareholders of increased
profitability per share. More so, as at 2016, the firm paid 11.5% of its earnings as dividends to
Stock days 66.2 66.7 66.8 73.7
Debtor days 21.4 15.6 18.6 17.7
Creditor days 155.8 146.8 150.9 158
Working capital days (68.2) (64.5) (65.5) (66.6)
Dividend announced for the year (£) 0.10 0.10 0.10 0.10
Dividend pay-out ratio (%) 12.3 8 7.4 11.5
Earnings per share (£) 0.81 1.25 1.35 0.87

1566003
9
shareholders as indicated by the dividend pay out ratio. This is an increase from the previous
year which is not as a result of increased dividend but as a result of increased earnings.
JLR pays a fixed dividend of 10p which could be an indication of stability or a reflection of
the decision of a few shareholders and would be more attractive to risk averse people who
would also be less demanding on return.
In addition to the analysis of the firm, its ROCE compared to competitors is impressive, below
is a radar diagram showing four years ROCE of JLR and its competitors.
From the figure and table above, JLR stands out, only in the last fiscal year is it very low.
Daimler is the lowest not because of its PBIT (its PBIT is the highest) but because of its huge
assets, this means it is not making enough earnings for its capital. That of BMW has been quite
stable after 2012 which was its best year but 2012 shows it can do better. Another firm that
would have been a good fit but is not included is Aston martins because its financial statements
are not published.
ROCE 2015 2014 2013 2012
JLR 12.2 24.4 28.1 24.4
BMW 16.3 16.0 16.2 19.3
Audi 13.8 16.1 15.4 20.5
Porsche 18.5 15.5 16.1 15.2
Daimler 9.4 8.7 9.9 8.5
0
5
10
15
20
25
30
JLR
BMW
AudiPorsche
Daimler
2015 2014 2013 2012
Figure 2. Four years ROCE of JLR and competitors

1566003
10
Implication of ‘Brexit’ on jaguar land rover revenue
The result of the referendum as mentioned earlier is likely to have an effect on the profits of
jaguar land rover, JLR has predicted a drop in profit of £1bn by 2020. This is due to world
trade organisation rules involving 10% tariff on exports and 4% inbound tariff on components
(the Guardian, 2016) which is not good news as Europe has 24% of JLR’s market and it imports
30% to 40% of its component parts (Mukherjee, 2016).
As stated earlier, there is already a 40% decrease in profits due to cost of expansion, any further
decline in profit would affect the funding of its expansion negatively. It already signed a deal
to build a plant in Slovakia which is yet to start and plans to buy Silverstone race track. The
result of the referendum which is likely to take two to three years to have any significant effect
leaves the firm some time to build the plant in Slovakia, this factory would be important to
JLR’s European business if there is an increase in tariff.
More so, the vote to leave may also affect the price of cars, JLR may have to decide between
making reduced profit to keep current price and stay competitive or transfer the burden of trade
tariffs to the consumers in form of higher prices (Hull, 2016).
Evaluation
More cost effective measures should be taken; the firm seems to be involved in a lot of
expansion. It could slow down a bit on expansion by focusing on the most important areas, the
firm’s profit has already dropped by 40% between 2015 and 2016, there is not much left of the
profit to drop again by another £1bn due to Brexit assuming profits turn out similar or lower
due to expansion. This would also mean more debt for the company to fund its £1bn factory in
Slovakia seeing that the firm funds its expansion independent of the parent company.
The firm should also hasten its decision to be listed as that gives it access to more funding.

1566003
11
Strategy Analysis
Having done the financial analysis, strategy holds more. Porters five forces is used to analyse
the industry’s competitiveness. How intense or benign the forces are, determine the
competitiveness and provide explanation for the level of profitability in the industry (Porter,
2008). The industry may be appealing but the barriers to entry are somewhat high, with very
high capital requirement, lots of laws and regulations guiding activities in the industry, fierce
competition among already established firms and differentiation of some brands, the threat of
new entrant is low. Novel services and technology such as ride sharing and autonomous
driving in which JLR is involved (Burt, 2016; Campbell, 2016) further raises the bar for new
entrants however disruptive firms like Tesla prove the opposite. Although the threat of new
entrants is low, the competition among already established firms is very strong. Competitors
like BMW, Audi and Porsche to the land rover and BMW and Daimler Benz to Jaguar all offer
great designs, functionality and prices to sway customers making the rivalry among
competitors high. One of Land Rover’s dealership tries to handle this by not only listing
features of Land Rover on its site but comparing these features to that of named competitors,
portraying Land Rover as better than its competitors’ (Landroversanantonio.com, 2016). This
move may prove futile if those the consumers perceive to be competitors are different from the
listed competitors or if the features used in comparison are not priority to the consumers. In
addition to consumers being likely to purchase from competitors, some may decide to go for
fairly used cars which is a substitute for the real deal. The used car market volume still
dominates the new car market volume in the UK (Centre for Automotive Management, 2014).
Due to this, the threat of substitutes is moderate. While consumers are open to all these choices
and bargaining power of buyers may seem high, certain factors may lower it. Apart from the
difference in price, there is more difference in style, design and functionality, this leaves JLR
a chance to attract buyers and lower the bargaining power of buyers hence making it moderate.

1566003
12
Lastly, the standards in quality, accuracy and timeliness that accompany many long term
contracts between car manufacturers and suppliers are similar hence a low switching cost
among suppliers. Last year JLR presented supplier excellence awards to ten of its suppliers,
this shows the strong relationship the firm has with its suppliers and thus can be an indication
of low bargaining power of suppliers.
We also see an interplay between the factors in the macro environment and the five forces, the
legal factor is part of the reason the threat of new entrant is low, social and technological factors
affect the bargaining power of buyers and is the reason the firm can stand out in a densely
competitive market.
It is in this competitive environment that JLR uses the differentiation strategy as a competitive
strategy. On the Bowman’s clock, it would be somewhere between 4 and 5. The Bowman
strategy is used as opposed to porter’s generic strategies because the later is restrictive and
sometimes unrealistic (Núñez-Cacho Utrilla et al., 2012). Bowman’s strategy offers a wider
variety along the same lines of cost and perceived value and also bridges the gap between
intended and realized strategy (Bowman and Johnson, 1992).
Figure 3. JLR on Bowman’s strategy clock

1566003
13
From the diagram, we see that JLR is an average priced differentiator with products like the
jaguar XE and XF and for exclusive products like the XJ220 and XF10 it is a premium
differentiator. Certain criteria need to be in place to successfully deliver this strategy, Bowman
associates internal success criteria with the delivery of strategy (Faulkner and Bowman, 1992).
JLR possesses some of these criteria which helps it deliver a premium luxury product at a fair
price and an exclusive price. Some of these factors which support a better product include
innovation, research and development, patents and brand recognition while factors for a well
priced product are technology and experience curve. While other factors have been discussed
previously, the experience curve hasn’t. In this area we see that JLR has significantly reduced
its total value added cost of a product over its long period of existence due to its experience in
the industry. This has provided for cost effective manufacturing that transfers to the price of
some of its products.
One more important factor that has aided the successful implementation of this strategy is the
limited nature and exclusivity of the product line of JLR. The firm’s product line consists of
six jaguar and six land rover models ranging from elegant sports cars to SUVs’, the firm is able
to concentrate its innovation in a few models.
All of the factors mentioned above highlight the strengths of the firm and indicate that JLR
could explore opportunities in emerging markets where there are rising income levels,
improving economic situations and increasing desire for luxury. These emerging markets
include Nigeria and the Philippines amongst others (Hodgson, 2015), where JLR currently has
limited presence. One threat in seizing this opportunity is the existence of already established
competitors, JLR would need strong marketing to handle this threat.
JLR’s strategy as a subsidiary supports its competitive strategy, as a subsidiary under Ford
motors, JLR operated more with a support and implementation strategy. The parent firm (Ford)

1566003
14
had high level of control on JLR not allowing much autonomy for creativity and innovation.
The case was different with the Indian firm (Tata) acquiring JLR. The subsidiary level strategy
in operation is the autonomous strategy and it is more like the global product mandate than
the mini replica role as JLR has complete control of its design, production and marketing
(O'Donnell and Blumentritt, 1999). If Tata exercised the support and implementation role, its
decisions may have affected JLR’s positioning as both firms have different strategies and are
positioned differently. The major factors that support the use of an autonomous strategy in the
case of JLR include excellent infrastructure, sophisticated market and technology knowledge.
Although subsidiaries with a differentiation strategy may need strong support from the parent
firm (Mellahi and Frynas, 2015), the results of JLR show that an autonomous strategy is a
better strategy for the firm as they appear more innovative and have expanded more in the last
8 years with Tata than the 8 years spent with Ford. One may be forced to argue that the use of
this strategy is because the acquirer is from an emerging market and is probably acquiring
predominantly because it requires access to knowledge, technology and brand than control and
access to market. While this may be the case, the main point is knowing what factors support
what strategy and choosing the ‘best fit strategy’.
The strategy of JLR would not be complete without talking about its mode of
internationalization. The firm is in several markets such as the US, China, Brazil, India etc.
This section examines its entry into foreign markets, it seeks to answer the questions where,
why and how. This analysis is done using two countries the firm recently entered which are
China and Brazil. The first question to be answered would be why these locations. The major
reason for entry into the Chinese market is increasing sales, in the last five years JLR had 17%,
21%, 24%, 25% and 19% of its retail sales in China respectively. This increasing sales except
for last year fuelled a better option to engage in foreign direct investment than merely export

1566003
15
its products as it offsets the large amount of tariffs involved in export and further allows the
firm to adapt its cars to the Chinese consumers taste (Jaguarlandrover.com, 2016). The case of
Brazil is quite different; Brazil is not a large importer of JLR cars compared to China but the
country’s desire for luxury cars might have just been the reason that drove JLR into the market.
According to the Brazilian association of vehicle importers (ABEIFA), luxury car sales have
performed relatively well (Leahy, 2016).
Its mode of entry into these different markets is different as well. While it entered the Chinese
market via a joint venture with Chery automobile, it entered Brazil via a wholly owned
subsidiary. This raises the second question of why the different modes of entry in the different
countries. The Chinese government has a law on a 50% foreign ownership limit in the car
industry (Ping, 2015). This is the reason any automobile company seeking to enter the Chinese
market via FDI would need a Chinese partner and engage in a joint venture. This has not
stopped automobile firms from going into the Chinese market as research shows that the
automobile industry holds a greater part of its foreign direct investment which is due to its
economic growth (Gallagher, 2016). A similar law does not exist in Brazil which removes any
restriction on the mode of entry however JLR claims that a wholly owned subsidiary and local
sourcing of some materials would attract a lifting of the heavy taxes attached to foreign cars
import in this market, what could be called location advantage.
Implication of Brexit on strategy
Apart from the financial implication of Uk’s vote to leave the EU, there are other implications
that affect strategy. It would affect the firms access to engineering talent which involves
retaining existing ones and attracting new ones from the EU. The is also important for R&D
collaboration (KPMG, 2016).
Figure 3. JLR on Bowman’s strategy clock

1566003
16
Recommendation and Conclusion
In conclusion, the financial position of JLR has been examined using four sets of ratios. These
ratios have shown that the firm is making good profit and returns for investment until now
when its expansion cost has significantly risen and could be the start of a challenge. They also
show that the firm is doing well compared to competitors and would be an attractive one for
investors should the firm be listed on the London stock exchange. The efficiency and ability of
JLR to meet its short term and long term obligation is also an area to commend as shown by
the working capital and liquidity and solvency ratios respectively. Several factors put the firm’s
profitability in question as we see in the PEST analysis from the effect of the referendum to
the slowing economic growth in China which takes us to the strategy board.
It is evident that the industry in which the firm operates is a highly competitive one but with a
strategy such as the one JLR operates (differentiation) and the right factors available to use this
strategy, it is a success.
In addition to the evaluation and some recommendations in the body of the report, more can
be said of JLR looking jointly at its finance and strategy.
JLR could introduce more of its premium differentiator brands to China than the lower priced
differentiator brands to boost revenue in China, although China’s economic growth is slowing
down, the affluent middle class would continue to stand out and it would be more profitable to
sell premium differentiated models.
The brand reputation of the firm could also pave a way for it in emerging markets and boost
sales hence the firm should be looking to build assembling plants in some of these countries in
the near future, establishing manufacturing plants may not be cost efficient as the size of these
markets may not be big enough for that.
It is not enough to cut cost, prioritizing investment would also be beneficial to avoid an increase
in debt. Its proposed plant in Slovakia probably needs more attention than the Silverstone race

1566003
17
track. This would take care of the uncertainties brought by the results of the referendum in the
future.
JLR should also stay abreast of technology by continuing with its rigorous research and
development. The automobile industry advancement depends on this, as mentioned earlier,
innovative and disruptive firms are taking advantage of this and if JLR must thrive especially
as a luxury brand, it must stay on top in this area. In addition to the electric cars, ride sharing
and autonomous driving concepts, the firm should be thinking of what the next big thing in the
industry would be.
Finally, its existing modus operandi in terms of relationship with the parent firm is best for the
firm’s success and should continue. Having extensively analysed JLR and realized the
aforementioned findings and recommendations, I think the firm would do better based on this.

1566003
18
Reference
Atrill, P. and McLaney, E. (1997). Accounting and finance for non-specialists. London:
Prentice Hall.
Bowman, C. and Johnson, G. (1992). Surfacing competitive strategies. European
Management Journal, 10(2), pp.210-219.
Burt, M. (2016). Jaguar Land Rover reveals off-road autonomous driving technology |
Autocar. [online] Autocar.co.uk. Available at: http://www.autocar.co.uk/car-
news/industry/jaguar-land-rover-reveals-road-autonomous-driving-technology [Accessed 11
Aug. 2016].
Campbell, P. (2016). Jaguar Land Rover profits fall 40% despite rise in sales - FT.com.
[online] Financial Times. Available at: https://next.ft.com/content/317cc2ca-2675-11e6-
8b18-91555f2f4fde [Accessed 3 Aug. 2016].
Campbell, P. (2016). Jaguar to launch car-sharing scheme - FT.com. [online] Financial
Times. Available at: https://www.ft.com/content/56ebb4b6-fda9-11e5-b5f5-070dca6d0a0d
[Accessed 11 Aug. 2016].
Cuff, M. (2015). Reports: Jaguar to launch first all-electric car in 2017. [online]
http://www.businessgreen.com. Available at:
http://www.businessgreen.com/bg/news/2434828/reports-jaguar-to-launch-first-all-electric-
car-in-2017 [Accessed 2 Aug. 2016].
Faulkner, D. and Bowman, C. (1992). Generic strategies and congruent organizational
structures: Some suggestions. European Management Journal, 10(4), pp.494-500.
Gallagher, K. (2016). Foreign Technology in China’s Automobile Industry: Implications for
Energy, Economic Development, and Environment. China Environment Series. [online]
Available at:
https://www.wilsoncenter.org/sites/default/files/CES%206%20Feature%20Article,%20pp.%2
01-18.pdf [Accessed 8 Aug. 2016].
Hodgson, A. (2015). Top 5 Emerging Markets with the Best Middle Class Potential. [online]
Euromonitor International Blog. Available at: http://blog.euromonitor.com/2015/09/top-5-
emerging-markets-with-the-best-middle-class-potential.html [Accessed 8 Aug. 2016].
Hull, R. (2016). What could Brexit mean for motorists and the UK automotive industry?
[online] This is Money. Available at: http://www.thisismoney.co.uk/money/cars/article-
3658133/What-Brexit-mean-motorists-UK-automotive-industry.html [Accessed 31 Jul.
2016].
jaguarlandrover.com (2016). [online] Available at:
http://annualreport2015.jaguarlandrover.com/assets/pdf/jlr_ar_2014-15.pdf [Accessed 18 Jul.
2016].

1566003
19
jaguarlandrover.com. (2016). Financial performance; Fiscal year 2016 and quarter 4.
[online] Available at: http://www.jaguarlandrover.com/media/102887/q4-fy16-investor-
presentation-final.pdf [Accessed 23 Jul. 2016].
Jaguarlandrover.com. (2016). JAGUAR LAND ROVER REPORTS SEPTEMBER RESULTS
FOR 2015/16 FISCALYEAR | Jaguar Land Rover Corporate Website. [online] Available at:
http://www.jaguarlandrover.com/gl/en/investor-relations/news/2015/10/14/jaguar-land-rover-
reports-september-results-for-201415-fiscalyear/ [Accessed 1 Aug. 2016].
Jaguarlandrover.com. (2016). Production & Operations | Jaguar Land Rover Corporate
Website. [online] Available at: http://www.jaguarlandrover.com/gl/en/innovation/production-
operations/ [Accessed 12 Aug. 2016].
KPMG, (2016). The UK Automotive industry and the EU. [online] Available at:
http://www.smmt.co.uk/wp-content/uploads/sites/2/SMMT-KPMG-EU-Report.pdf [Accessed
1 Aug. 2016].
Leahy, J. (2016). Jaguar Land Rover opens £240m Brazil factory - FT.com. [online]
Financial Times. Available at: https://www.ft.com/content/b5ac0aaa-329c-11e6-8825-
ef265530038e [Accessed 8 Aug. 2016].
Mellahi, K. and Frynas, J. (2015). Global strategic management.
Mukherjee, S. (2016). Brexit may have adverse impact on Jaguar Land Rover's operations -
The Economic Times. [online] The Economic Times. Available at:
http://economictimes.indiatimes.com/industry/auto/brexit-may-have-adverse-impact-on-
jaguar-land-rovers-operations/articleshow/52842926.cms [Accessed 1 Aug. 2016].
Núñez-Cacho Utrilla, P., Grande Torraleja, F., Muñoz Vázquez, A. and Aranda Ogáyar, M.
(2012). How Does Strategic Choice Affect Business Results? A Case Study of Mutual
Guarantee Societies. IJBM, 7(7).
O'Donnell, S. and Blumentritt, T. (1999). The contribution of foreign subsidiaries to host
country national competitiveness. Journal of International Management, 5(3), pp.187-206.
Phillips, T. and West, K. (2015). After a bumpy year for Jaguar Land Rover, can China still
drive it forward?. [online] the Guardian. Available at:
https://www.theguardian.com/business/2015/dec/29/jaguar-land-rover-china-figures-forecast
[Accessed 2 Aug. 2016].
Ping, X. (2015). KWM | China plans sweeping foreign investment reforms. [online]
Kwm.com. Available at: http://www.kwm.com/en/uk/knowledge/insights/china-plans-
sweeping-foreign-investment-reforms-20150414 [Accessed 12 Aug. 2016].
Plisner, P. (2016). Emission rules to end Land Rover Defender production - BBC News.
[online] BBC News. Available at: http://www.bbc.co.uk/news/uk-england-birmingham-
24446070 [Accessed 1 Aug. 2016].

1566003
20
Porter, M. (2008). The Five Competitive Forces that Shape Strategy. Harvard Business
Review, 86(1), pp.78-93.
Ruddick, G. (2015). Jaguar Land Rover's £1bn factory in Slovakia 'could threaten UK jobs'.
[online] the Guardian. Available at:
https://www.theguardian.com/business/2015/dec/11/jaguar-land-rover-factory-slovakia-uk-
jobs-union [Accessed 29 Jul. 2016].
the Guardian. (2016). Brexit could cause £1bn drop in Jaguar Land Rover profit by 2020.
[online] Available at: https://www.theguardian.com/business/2016/jun/21/brexit-could-cause-
1bn-drop-jaguar-land-rover-profit-sources-say [Accessed 29 Jul. 2016].

1566003
21
Appendices
Calculations for jaguar land rover 2015 ratios (calculations for the preceding years are
done using the same variables)
ROCE = Profit before interest and tax = 2,707 = 24.4%
Total asset – current liability 18,563-7,457
ROCE: Return On Capital Employed
The PBIT (operating income) was derived by subtracting the finance income, adding finance
expense (interest payable) and (adding/subtracting) share of loss from equity accounted
investees from the profit before tax.
ROSF = profit after tax = 2,038 = 33.7%
Ordinary share capital + reserves 6,040
ROSF: Return On Shareholders Funds
Gross profit margin=gross profit = 8,681 = 39.7%
Sales revenue 21,866
N.B. gross profit = revenue – material and other cost of sale = 21,866 – 13,185 = 8,681
Expenses/sales = Expenses = 7,275 = 33.3%
Sales 21,866
Total expense = employees cost + other expense + depreciation & amortization + foreign
exchange loss = 1,977 + 4,109 + 1,051 + 138 = 7,275
Net margin = PBIT = 2,707 = 12.4%
Sales 21,866
Asset utilization = sales = 21,866 = 1.97
Total asset – current liability 18,563-7,457
Current ratio = Current asset = 8,410 = 1.13
Current liability 7,457
Quick ratio/acid test=CA- Stock = 8,410-2,416 = 0.80
Current liability 7,457
Gearing = ST+LT debt = 156+2,381 = 42%
Equity 6,040
Interest cover = Operating profit = 2,707 = 20.1 times
Interest payable 135
Dividend pay-out = dividend announced for the year = 10 = 7.4%
Ratio earnings for the year available for dividends 135

1566003
22
Earnings per share =earnings available to shareholders = 2,038,000,000= £1.35
Number of ordinary shares in use 1,500,242,163
Stock days = stock * 365 = 2,416*365 = 66.8 days
Cost of sales 13,185
Debtor days = trade debtors * 365 = 1,112*365 = 18.6 days
Sales 21,866
Creditor days = trade creditors * 365 = 5,450*365 = 150.9 days
Cost of sales 13,185
Working capital days: stock days + debtor days – creditor days
66.8 +18.6 – 150.9 = (164.5)
2015 ROCE of competitors
NB: the last fiscal year for the competitors ends on 31st
December 2015 while that of JLR ends
31st
March 2016 thus the March 2016 figure of JLR is compared to the December 2015 figures
of competitors.
Daimler 13,186 = 9.4%
217,166-77,081
Porsche 3,404 = 18.5%
29,143-10971
Audi 4,836 = 13.8%
56,763-21554
BMW 7,836 = 16.3%
83,352-35,386

firm analysis

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Viewers also liked

Viewers also liked (16)

Similar to firm analysis

Similar to firm analysis (20)

firm analysis