Identify the main sources of company finance and the consequences of different capital structures.

Feb 15, 2024

Identify the main sources of company finance and the consequences of different capital structures.

The Task
This assignment is concerned with the financial performance and financial position of a company over a period of time. Key areas of interest are:
Performance: how well has the company performed as seen through its performance ratios?
Financing/Position: how does the company choose to finance its activities and investments and what are the implications of these choices for its financial position?

Your position is that of an analyst working in a financial advisory firm. Your role is to monitor and evaluate publicly available information about the company, reporting your findings to members of the executive team.
Your line manager, Maya Walden, has emailed you the following message:
‘Hi. We have been approached by a group of high net worth private investors in Dubai who are looking to make long-term, strategic investments into online retailing industries. Their representative, Liam, who is based in London, has expressed a particular interest in the global, fashion, retail industry sector. I have asked James, the finance intern, to pull together some ratios for ASOS plc in an excel spreadsheet and pass them on to you.
Can you prepare a report, no more than 1,200 words please, which clearly explains ASOS plc’s investing and financing activities and profits performance? The most recent annual report that we have been able to obtain is for the year ended 31 August 2021, so you should certainly use that. Could your report also explain anything that they have been investing in and how the company is being financed? You will need to present the ratios in your report, but you will not need to explain the meaning of the ratios themselves.
Could you conclude your report by stating whether or not, based on your analysis of the numbers along with other research, you think that ASOS plc would make a good long-term investment? You will find it helpful to use the information in the Strategic Report at the front of ASOS plc’s annual report to help you interpret the ratios but could you also include some research from newspaper articles and/or from news websites to back up your conclusions?
Your report must set out who it is to, who it is from, be dated, give a heading and include a brief introduction and conclusion. The main body of your report must include a discussion of the ratios (first of all for investing and financing, and secondly for the profits performance), to include information from the sources that you have decided to use.
Clarity of written English is important. Liam’s clients are highly educated but English is not their first language. Also, we need to respect the value of their time, so the report must be clear and direct. It is important that they can understand its message without having to think too much about it.
Thank you.

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You are required to
Review and evaluate the information provided
Source additional publicly available and relevant information e.g. management commentary type disclosure in annual reports, newspaper articles, websites etc.
Write a formal report addressed to your line manager, Maya Walden that addresses the request in the message.

Word limit: 1,200 words

Sources
Company information: https://www.asos.com/about/
Annual report: https://www.asosplc.com/investor-relations/results-centre/
Online links to The Guardian Business, The Financial Times and BBC news are provided via READING LISTS on moodle.

Learning outcomes relevant to this assignment
Locate, evaluate and use information from multiple sources to critically appraise the financial performance and position of companies in the light of their strategic and operational objectives.
Identify the main sources of company finance and the consequences of different capital structures.

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