Financial Performance Analysis of FirstGroup Plc and MCG

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RBP020L062H: FINANCIAL

PERFORMANCE MANAGEMENT

A Report on Financial Performance Analysis of

FirstGroup Plc and MCG Group Plc

Student Name:

Student ID:

FINANCIAL PERFORMANCE MANAGEMENT

Executive Summary

Financial performance management is responsible for providing meaningful financial insights

about an organisation over a specific period. The overall financial performance of FGP compared

to its key competitor MCG is evaluated in this report with the help of different financial ratios. Key

financial trends have been identified along with the business areas that require further

improvement. A brief justification has been provided regarding the choice of MCG as the key

competitor of FGP and different financial considerations such as revenue, profitability and assets

have been discussed. The leverage ratios evaluate high debt usage as compared to equity,

capital, and assets that create financial risk for FGP and MCG. Further, the improved liquidity and

valuation position provides a competitive edge in the market to FGP although the profitability and

working capital efficiency are uncertain and influence the financial position in 2022-23. A concise

approach to the balanced scorecard is implemented here aligning with the vision and the strategy

of FGP. This approach is beneficial to determine the key performance indicators that the

concerned organisations need to focus on. The balanced scorecard develops the strategic

objectives to improve the operational and financial performance of FGP for ensuring an action

plan towards achieving the goals. In addition to this, the concept of integrated reporting is

highlighted along with its potential benefits and drawbacks.IR is beneficial for the concerned

organisation however, it poses some challenges for FGP as well. A well-structured business

model along with effective cost-planning strategies are beneficial to mitigate these challenges

effectively.

FINANCIAL PERFORMANCE MANAGEMENT

Table of Contents

1. Introduction................................................................................................................................ 5

1.1 Overview of the report..........................................................................................................5

1.2 Purpose of the report........................................................................................................... 5

2. Question 1: Financial Performance Using Ratio Analysis.........................................................5

2.1 Description of the main company FGP and Competitor MCG.............................................5

2.2 Justification for selecting MCG as a competitor for FGP.....................................................7

2.3 General and financial information of FGP and MCG...........................................................7

2.4 Interpretation of different financial ratios.............................................................................. 9

2.4.1 Liquidity Ratios..............................................................................................................9

2.4.2 Profitability ratios.........................................................................................................10

2.4.3 Working capital ratio.................................................................................................... 11

2.4.4 Valuation ratio..............................................................................................................12

2.4.5 Leverage Ratio............................................................................................................13

3. Question 2: Critical discussion of balanced scorecard............................................................13

3.1 Description of the Balanced Scorecard (BSC) of Kaplan and Norton................................13

3.2 Discussion of the possible limitations of traditional BSC and improvement measures......14

3.3 Development of a balanced scorecard for the company....................................................15

3.3.1 Vision and strategy of the company............................................................................15

3.3.2 Goals and measures of BSC....................................................................................... 16

4. Question 3: Significance and limitation of Integrated Reporting (IIR) framework....................17

4.1 Concept of IR.....................................................................................................................17

4.2 Benefits of IR......................................................................................................................18

4.2.1 Provision of historical information................................................................................18

4.2.2 Non-financial and forward-looking information............................................................19

4.3 Challenges of IR.................................................................................................................19

4.3.1 Lack of provision of detailed information.....................................................................19

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4.3.2 Understanding the use of limited resources................................................................19

4.3.3 Balancing Interests of different stakeholders..............................................................20

5. Conclusion and Recommendation...........................................................................................20

5.1 Conclusion......................................................................................................................... 20

5.2 Recommendations.............................................................................................................20

References.................................................................................................................................. 22

Bibliography................................................................................................................................. 26

Appendices.................................................................................................................................. 27

Appendix 1: Ratio calculations................................................................................................. 27

FINANCIAL PERFORMANCE MANAGEMENT

1. Introduction

1.1 Overview of the report

Financial performance management is a comprehensive approach to controlling finances and

measuring the organisational condition towards achieving corporate goals. The report evaluates

the financial performance of FirstGroup Plc (FGP) and MCG Group Plc (MCG) in 2022-23.

Further, interpreting the liquidity, working capital efficiency, profitability, valuation, and leverage

condition of the companies in the specific financial year helps to measure the overall financial

efficiency. Additionally, the critical analysis of different aspects of a balanced scorecard focuses

on the goals and measures for FGP concerning financial, customer, internal business, and

learning and growth. Further, the significance and limitations of Integrated Reporting (IR) are also

discussed for FGP to maintain the diverse interests of stakeholders. Therefore, the comparison

of financial performance analyses the market position of FGP against the competitor MCG in

2022-23.

1.2 Purpose of the report

The purpose of the report is to assess the financial condition of FGP in the fiscal year 2022-23

and compare the performance with MCG to analyse the market position in the UK transport sector

for making viable decisions. Thus, the financial performance analysis is an effective process for

analysing the financial strength and the areas for improvement to sustain business in the long

run.

2. Question 1: Financial Performance Using Ratio Analysis

2.1 Description of the main company FGP and Competitor MCG

FirstGroup

FGP is a leading multinational transport company in the UK that deals with transporting services

through bus, rail, and other modes of mobility for connecting people and reducing the complexity

of travel. Further, the company employs 30,000 people to generate revenue of £4.8bn in 2022-23

for carrying more than 1.8m passengers per day in the UK and operates 8,000 buses and rail

vehicles across the UK (FirstGroup, 2024). The business model of FGP consists of First Bus and

First Rail to fulfil the commitment to safety and reliability in transportation for operating over 4,500

buses, 3,500 locomotives and rail carriages across the UK (FirstGroup, 2023) [Refer to Figure

1]. Thus, FGP ensures the quality of life to set high standards in travelling for overall community

development.

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Figure 1: Business model of FGP

(Source: FirstGroup, 2023)

MCG

MCG is the public transport of the UK that operates globally to provide bus and coach services

under the brand National Express. The company deals with over 1 billion passengers in 2023 and

operates in more than 50 cities in 12 countries with 47,700 employees and 27,700 vehicles (MCG,

2024). Further, the evolving strategy of the company deals with the transition of a fully net zero

emission fleet and achieving the vision of becoming a premier shared mobility operator across

the globe [Refer to Figure 2]. Thus, to connect with the passengers, MCG empowers

transportation services to position the brand value in the market.

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Figure 2: Evolving strategy of MCG

(Source: MCG Group, 2023)

2.2 Justification for selecting MCG as a competitor for FGP

The major reason for selecting MCG as the key competitor of the FGP is that both companies are

small-cap industrial entities and operate within the transportation sector of the UK (Taylor, 2024).

Additionally, both of them have a healthy payout ratio and an ability to cover the dividend payment

with the earnings for the next several years. Apart from this, FGP and MCG both have similar

strategies and services that have intensified the competition hence the selection of MCG as the

key competitor of FGP is justified and the comparison of financial performance would provide

feasible outcomes.

2.3 General and financial information of FGP and MCG

FGP

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Figure 3: Annual revenue of FGP

(Source: Statista, 2023)

The annual revenue of FGP in 2021 was valued at £.8 billion in 2021 which reflects a decline of

11.7% compared to the previous year (Statista, 2023) [Refer to figure 3]. However, the

concerned organisation has managed to enhance its revenue by diversifying its operation in

different regions. Total assets of FGP increased to £4406.20 million in 2023 from £3833.90

million. The reason for this increment may be attributed to the enhancement of capital spending

to £120 million- £125 million to add 117 electric buses (FirstGroup, 2023; Reuters, 2023). The

overall profitability of the shows an upward trajectory due to the efficient management of revenue

and operating expenses.

MCG

Figure 4: Financials of MCG

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(Source: MCG Group, 2023)

The total revenue of MCG was enhanced by 12% in 2023 reflecting an overall operational

efficiency of the organisation to generate revenue. However, the adjusted operating profit of MCG

shows a marginal decline of 14.55%, from £197.3 million in 2022 to £168.6 million (MCG Group,

2023) [Refer to figure 4]. In this context, volume recovery, pricing benefits, and cost reduction

efforts contributed positively but they were offset by factors such as cost inflation and reduced

Covid subsidies. Additionally, Free Cash Flow (FCF) of £163.7m represents a strong FCF

conversion of 97% (MCG Group, 2023). The reason for this increment may be attributed to the

lower net maintenance of capital expenditures. However, the ROCE of the company has been

valued below the targeted level due to the decline in adjusted operating profit.

2.4 Interpretation of different financial ratios

2.4.1 Liquidity Ratios

Figure 5: Liquidity ratios

(Source: FirstGroup, 2023; Mobico Group, 2023)

The liquidity ratios in Figure 5 indicate an upward shift from the financial year 2022 to 2023 in

both FGP and its competitor MCG. As per higher travel demand, FirstGroup upgraded the profit

due to the government scheme in England to develop local economies by capping bus fares at

£2 had helped to increase passenger numbers to 83% (Reuters, 2023b). However, the cost-

cutting guidance of MCG ensures that third-quarter revenue will rise by 10% in 2023 (Meley and

Shiltagh, 2023). Therefore, the improved profitability drives the cash flow position of the business

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to fulfil the short-term financial obligation. Overall, FGP is compatible with liquidity position due to

high cash flow efficiency as compared to MCG in 2023.

2.4.2 Profitability ratios

Figure 6: Profitability ratios

(Source: FirstGroup, 2023; Mobico Group, 2023)

The profitability ratio in Figure 6 highlights a downward movement in profit margin and return

ratios of FGP and MCG from 2022 to 2023 that impact the financial position. Further, the rise of

passengers in the bus division of FGP by 20% has reported a 29% rise in adjusted operating

profit to 58.4 million pounds (Anilkumar, 2023). However, the transport workers have gone on

strike over the past year in pay disputes due to inflation hitting 40-year highs (Anilkumar, 2023).

Further, MCG faces a profit decline due to high costs due to inflation and labour shortage

(Reuters, 2023b). Therefore, the profitability position of both companies declined despite the high

passenger volume in 2023. Moreover, FGP performed well with a positive margin and return

although MCG faced major loss from operation.

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2.4.3 Working capital ratio

Figure 7: Working capital ratios

(Source: FirstGroup, 2023; Mobico Group, 2023)

The working capital ratios in Figure 7 represent an increasing trend in receivable and payable

days of FGP although a decreasing trend in receivable days of MCG although a stable position

of inventory days in both companies from 2022 to 2023. Inefficient collection from customers of

the outstanding valuers and inventory conversion into sales lower the business efficiency (Akbar

et al., 2021). In this way, neither FGP nor MCG are efficient in collecting payments from

customers, managing inventory, and making payments to suppliers that influence the working

capital cycle. Overall, the working capital cycle of FGP is viable as compared to the competitor

MCG to involve less time in working capital management and developing the business

performance.

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2.4.4 Valuation ratio

Figure 8: Valuation ratios

(Source: FirstGroup, 2023; Mobico Group, 2023)

The valuation ratios in Figure 8 interpret an increasing movement in price to earnings, dividend

yield and book value per share of FGP and a decreasing value in EPS although MCG showcased

a downward shift in 2022-23. As per annual profit growth to report 226.8 million pounds operating

profit ensures a dividend of 1.1 pence in FGP (Reuters, 2022). Contrarily, the shares of MCG

went down 28.1% at 61.1 pence in 2023 due to a low-profit warning (Reuters, 2023b). Thus, the

market valuation of the competitor MCG is degraded due to low earnings from share and dividend

payment capacity, unlike FGP which drives dividend payment capacity to improve market

valuation in 2023. Overall, the market valuation of FGP is viable as compared to MCG to maintain

earnings from shares and develop a dividend payment policy.

FINANCIAL PERFORMANCE MANAGEMENT

2.4.5 Leverage Ratio

Figure 9: Leverage ratios

(Source: FirstGroup, 2023; Mobico Group, 2023)

The leverage ratios in Figure 9 show an upward movement in debt-equity, debt-capital, equity

multiplier, and interest coverage ratios in both companies from 2022 to 2023. In this way, the high

debt is used to finance the long-term obligation of the business rather than using equity, capital,

and assets although improved interest payment capacity. The usage of high debt in the capital

structure increased the financial risk of the business to empower the burden of liabilities and

minimise the use of other funds such as equity, capital and assets (Arhinful and Radmehr, 2023).

Thus, FGP and MCG faced financial difficulty due to high debt levels in 2023 although a sufficient

level of profit emphasised the interest payment capacity. Moreover, the leverage condition of both

companies is not viable in 2023 due to continuous increases in debt levels.

3. Question 2: Critical discussion of balanced scorecard

3.1 Description of the Balanced Scorecard (BSC) of Kaplan and Norton

Balance Scorecard (BSC) is the framework used to develop strategic objectives and measures

against the KPIs of financial, customer, internal business, and learning and growth aspects.

Further, the significance of BSC is to ensure a holistic system for developing organisational

performance to execute the plan towards the corporate goals (Kaplan and Norton, 1992).

According to the strategy and vision of the organisation, the different aspects of a BSC include

FINANCIAL PERFORMANCE MANAGEMENT

strategic mapping and communication with the stakeholders towards achieving the goals [Refer

to Figure 10]. Hence, the BSC drive excellence in business operations to improve decision-

making to empower the diverse operation of different perspectives.

Figure 10: Balanced scorecard

(Source: Ali and Ayodele, 2018)

3.2 Discussion of the possible limitations of traditional BSC and

improvement measures

Traditional BSC has limited to only financial aspects of the business rather than focusing on the

internal business performance, customer aspects, and growth opportunities. Further, limited

guidance could be provided for each performance metric of the business that limits the business

scope (Lee, Tsui and Yau, 2023). In this way, these reasons could lead to out-of-date traditional

BSC in current years although the improvement measures drive the decision-making process.

Considering the non-financial aspects of the business by BSC is beneficial to focus on customer

satisfaction, employee performance, and sustainability concerns (Yawson and Paros, 2023). In

this way, FSG could overcome the limitations of traditional BSC while addressing both quantitative

and qualitative aspects. Therefore, the improvement measures could be beneficial to handle the

shortcomings of traditional BSC in the decision-making process.

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3.3 Development of a balanced scorecard for the company

3.3.1 Vision and strategy of the company

Figure 11: Vision and strategy of FGP

(Source: FirstGroup, 2024b; FirstGroup, 2024c)

Vision: The vision of FGP is to deal with convenient and easy mobility to improve the quality of

life of people and connect with communities (FirstGroup, 2024b) [Refer to Figure 11]. Thus, the

company provides solutions for reducing the complexity of travelling to ensure safety,

accountability, support, and high-standard operation.

FINANCIAL PERFORMANCE MANAGEMENT

Strategy: The strategy of FGP is to ensure sustainable operation by becoming the partner of

zero-emission transport, supporting people, innovative services, following ethical standards, the

safety of people, and environmental management to develop community relations (FirstGroup,

2024c) [Refer to Figure 11]. Hence, the sustainability strategy develops mobility operations in

FGP to deliver sustainable value.

3.3.2 Goals and measures of BSC

Customer perspective

Critical Success Factors (Objectives)

○ To develop 5% growth in passengers annually.

○ To improve customer satisfaction score by 7%

KPIs

The critical success factor related to customer satisfaction is improving the service quality for

standardised travelling expenses. In this way, the strategy towards digital operations such as

online ticket and tracking processes along with customer loyalty programs drives satisfaction

levels among passengers (Verma, 2022). Based on that, FGP needs to develop strategic

measures for digitising the booking and tracking processes along with organising loyalty programs

for regular customers. Thus, these measures improve the customer satisfaction score and drive

growth in passengers to improve the KPIs.

Internal business perspective

Critical Success Factors (Objectives)

○ To reduce the operational cost by 4%.

○ To implement environment-friendly fuel options.

KPIs

The internal business performance has improved to control the operational cost and focus on

eco-friendly fuel to sustain its position in the long run. Based on the measures to automate the

process through adapting technology such as IoT, sensors, and machine learning for route

planning, optimise the business operation (Zantalis et al., 2019). Further, these technologies

reduce operational costs and the usage of sustainable fuel protects the environment. In this case,

FGP needs to address the eco-friendly fuel for developing the transporting system and optimise

automation to reduce cost and improve performance. Hence, tracking the KPIs such as reduction

in operational cost, and optimisation of service to use sustainable fuel drives the business

process.

Learning and growth perspective

Critical Success Factors (Objectives)

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○ To adapt transportation management systems (TMS) for optimising operations.

○ To arrange learning and professional training for employees.

KPIs

The success factors to empower learning and growth are to optimise technology and train

employees to grow productivity and create future opportunities for the business. As per the

measure of organising training sessions for the staff upskill the knowledge and capacity to deal

with customers. In addition, with the use of transportation management systems (TMS)

technology embraces excellence to optimise the operation (Božić et al., 2024). Based on that,

FGP needs to implement TMS and provide training to the workforce to create growth for the

business and drive excellence. Thus, the use of technology and providing proper training to the

employees might help the company attain success in tracking KPIs.

Financial perspective

Critical Success Factors (Objectives)

○ To improve total revenue by 10% yearly.

○ To develop an operating margin of 5% annually.

KPIs

The revenue growth and operating margin of the business have improved through diversifying

revenue streams and managing operational costs. As per the strategy to develop a cost-saving

plan and use of funds in profitable sources grow the overall revenue. Further, the development of

services to improve the quality and safety standards enhances the expenses of customers and

ultimately improves financial performance (Rane, Achari and Choudhary, 2023). In this way, FGP

needs to implement this strategy for driving revenue and operating margin to sustain business in

the long run. Thus, the success factors of the financial perspective help to track KPIs and improve

the financial position.

4. Question 3: Significance and limitation of Integrated Reporting (IIR)

framework

4.1 Concept of IR

IR refers to high-quality corporate reporting as well as connectivity between the financial

disclosure associated with sustainability and financial statements (IFRS, 2024). This approach is

responsible for bringing information together for investors in terms of assessing the ability of an

organisation to create value over time. An organisation may focus on areas such as transparent

communication, long-term strategy alignment, stakeholder engagement, and environmental

stewardship to create value. In addition to this, IR also promotes a more cohesive and efficient

FINANCIAL PERFORMANCE MANAGEMENT

approach to corporate reporting based on different corporate reporting standards.IR creates,

preserves and erodes values for an organisation which are inextricably linked to other

stakeholders, society and the natural environment (IFRS, 2024) [Refer to figure 12]. These

factors are beneficial for an organisation in terms of enhancing accountability and transparency.

Figure 12: IR within an organisation

(Source: IFRS, 2024)

4.2 Benefits of IR

4.2.1 Provision of historical information

Historical information has been provided by IR through which stakeholders can understand the

overall performance of an organisation. This is responsible for aiding the overall growth trajectory

and trends over a specific period. FGP has provided detailed historical financial information

regarding revenue, profitability and assets within its annual report. This information may be

beneficial for stakeholders to assess trends and growth. For instance, the significant

enhancement in adjusted EPS from 1.6P in 2022 to 10.6P in 2023 indicates the improvement of

profitability over the one-year period (FirstGroup, 2023). This aligns with the aspect of IR by

providing quantitative financial data for stakeholders to understand the ability of FGP to create

value. IR provides insights regarding the underlying factors for success and failure thus

overcoming the limitations of traditional reporting.

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4.2.2 Non-financial and forward-looking information

FGP has incorporated IR within their financial report by providing forward-looking statements

relative to the business, strategy and plans (FirstGroup, 2023). Additionally, it also reflects the

current goals, operations and assumptions related to future financial conditions. Apart from this

IR also provides a holistic view regarding the operations, risks and opportunities of a company

thus including the non-financial aspects as well. For instance, FGP integrated ESG considerations

within the company's annual report in terms of focusing on non-financial and forward-looking

information within the company. Information associated with the organisational commitment

towards operating a zero‑emission fleet by 2035 is reflected in the report (FirstGroup, 2023). The

concerned organisation has also mentioned that they would be focusing on the replacement of

existing diesel buses with electric or hydrogen-powered vehicles. First Rail is supporting the UK

government’s target to remove all diesel‑only trains from service by 2040 and deliver a net‑zero

railway network by 2050 (FirstGroup, 2023). The inclusion of this forward-looking information may

be useful for stakeholders to understand the overall performance of the company along with its

impact on society and the environment.

4.3 Challenges of IR

4.3.1 Lack of provision of detailed information

One of the primary challenges of IR is associated with obtaining detailed information in terms of

constructing a comprehensive report. This addresses the issues of conciseness because in most

cases the integrated reports reviewed ran over a huge number of pages (ACCA Global, 2017).

Hence, stakeholders may experience difficulties in terms of finding meaningful information to

make informed decisions. For example, the integrated annual report of FGP contains 240 pages

and it also includes different non-financial information such as climate-related financial disclosure,

transition risks and opportunities. Due to this it is more time-consuming to prepare and requires

high expertise for understanding because it is a concise report explaining the matter in summary.

4.3.2 Understanding the use of limited resources

The efficient allocation of resources cannot be understood with the help of the incorporation of IR

in business operations that eventually addresses the issue of materiality. Companies often face

competing priorities when it comes to resource allocation, especially regarding investments in

sustainability initiatives, stakeholder engagement activities, and reporting processes (Maritan and

Lee, 2017). For instance, FGP posits adequate resources in terms of continuing their operation

in future years but there is no clear evidence in the integrated annual report regarding how these

resources can be utilised in different organisational levels to obtain maximum return. Additionally,

this may also create supply chain constraints for FGP if the transport sector starts competing for

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the same technology and resources. The integrated annual report of FGP does not provide any

specific way through which the concerned organisation adequately segregates resources

(FirstGroup, 2023). In addition to this sustainable procurement is the key part of the procurement

process of FGP but within the integrated report there is no evidence provided regarding the

purchasing practices. This can be challenging for the organisation in terms of assessing the

resources for sustainable procurement.

4.3.3 Balancing Interests of different stakeholders

IR is beneficial for addressing the needs of stakeholders while providing a holistic view of the

overall performance and prospects of an organisation. However, balancing the diverse needs of

various stakeholders can be challenging because their priorities and expectations may differ. For

instance, investors may prioritise financial metrics such as revenue, profitability and financial

leverage and on the other hand, environmental advocacy groups may focus on sustainability

initiatives (Gleißner, Günther and Walkshäusl, 2022). FGP, in this context, has different

stakeholders with diverse needs regarding financial returns and sustainability. The overall

profitability and financial leverage of FGP affects the UK government and political stakeholders

and on the other hand, sustainability considerations can be impactful on the eco-friendly

customers. Hence, developing a strong collaboration and engagement in terms of creating long-

term value can be a daunting task for FGP.

5. Conclusion and Recommendation

5.1 Conclusion

The Transport sector in the UK is growing rapidly with the inclusion of advanced technology and

innovation. FGP has managed to establish itself as a leading player within the transport sector

with the efficient management of operational activities and sustainable initiatives. Strategic

decisions regarding the expansion of services provided significant growth to the organisation.

However, its competitor MCG reflects a poor performance during the last two years in terms of

managing its financial operations to earn profit. Utilising the BSC approach, FGP developed

several strategic initiatives that contributed positively towards the accomplishment of company

vision and strategy. However, the company faces several issues regarding the implementation of

IR within its financial activities which requires careful observation.

5.2 Recommendations

Effective cost-cutting strategies such as optimisation of supply chain management and

outsourcing non-core functions within the business operation of FGP enhance the overall

profitability of the organisation.

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A robust data management system needs to be integrated within the evaluation process

to extract relevant data from a complex integrated report to save effort and time.

FGP needs to prioritise investments based on their alignment with the strategic objectives

as well as long-term creation of value which would eventually enhance the transparency

and accountability within the operations.

Stakeholder engagement activities such as surveys and feedback sessions, and

partnership and collaboration to understand the expectations and priorities of different

shareholders.

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Appendices

Appendix 1: Ratio calculations

RATIO CALCULATION

First Group Plc Mobico Group Plc

Input data for Leverage Ratios: 2023

(£m)

2022(£m) 2023 (£m) 2022(£m)

Total Debt 1,656.10 873.80 3,009.10 2,788.20

Total Equity 750.80 885.10 1,066.00 1,373.80

Total Assets 4,406.20 3,833.90 4,075.10 4,162.00

EBIT (Operating income) 153.90 122.80 -98.30 -225.30

Interest Expense 70.00 176.60 79.20 1.20

LEVERAGE RATIOS: 2023

(£m)

2022(£m) 2023 (£m) 2022(£m)

Debt/Equity Ratio 2.21 0.99 2.82 2.03

Total Debt/Total Equity

Debt/Capital Ratio (D/C ratio) 0.69 0.50 0.74 0.67

Total Debt/(Tot.Equity+Tot.Debt)

Equity Multiplier 5.87 4.33 3.82 3.03

Total Assets/Total Equity

Interest Coverage Ratio 2.20 0.70 -1.24 -187.75

EBIT/Interest Expense

Input data for Liquidity Ratios: 2023

(£m)

2022(£m) 2023 (£m) 2022(£m)

Current Assets 1,745.40 1,528.20 1,007.50 947.80

Current Liabilities 1,999.30 2,075.00 1,361.70 1,609.60

Inventories 26.00 28.90 33.70 32.40

Cash 791.40 787.70 356.30 291.80

LIQUIDITY RATIOS: 2023

(£m)

2022(£m) 2023 (£m) 2022(£m)

Current Ratio 0.87 0.74 0.74 0.59

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Current Assets/Current Liabilities

Quick Ratio (or Acid Test Ratio) 0.86 0.72 0.72 0.57

(Current Assets-Inventories)/Current

Liabilities

Cash Ratio 0.40 0.38 0.26 0.18

Cash/Current Liabilities

Input data for Profitability Ratios: 2023

(£m)

2022(£m) 2023 (£m) 2022(£m)

Gross Profit 153.90 122.80 -21.40 -173.50

EBIT 153.90 122.80 -98.30 -225.30

Net Income 95.30 642.00 -162.70 -231.20

Sales 4,755.00 4,591.10 3,150.90 2,807.50

Total Equity 750.80 885.10 1,066.00 1,373.80

Total Assets 4,406.20 3,833.90 4,075.10 4,162.00

PROFITABILITY RATIOS: 2023

(£m)

2022(£m) 2023 (£m) 2022(£m)

Gross Margin 3.24% 2.67% -0.68% -6.18%

Gross Profit/Sales

EBIT Margin 3.24% 2.67% -3.12% -8.02%

EBIT/Sales

Net Profit Margin 2.00% 13.98% -5.16% -8.24%

Net Income/Sales

Return on Equity (ROE) 12.69% 72.53% -15.26% -16.83%

Net Income/Equity

Return on Assets (ROA) 2.16% 16.75% -3.99% -5.56%

Net Income/Tot. Assets

Return on Capital Employed (ROCE) 6.39% 6.98% -3.62% -8.83%

EBIT/Capital Employed

Input data for Valuation Ratios: 2023 2022(£m) 2023 (£m) 2022(£m)

FINANCIAL PERFORMANCE MANAGEMENT

(£m)

Earnings (Net Income) 95.30 642.00 -162.70 -231.20

Total Shares Outstanding 764.00 1,093.00 345.42 614.00

Current market price 114.80 127.50 0.96 0.66

Dividends per share 3.80 1.10 0.06 5.00

Total Equity 750.80 885.10 1,066.00 1,373.80

VALUATION RATIOS: 2023

(£m)

2022(£m) 2023 (£m) 2022(£m)

Earnings per share 0.12 0.59 -0.26 -0.38

Earnings/Tot.SharesOutstanding

Price/Earnings Ratio 920.33 217.07 -3.62 -1.75

Market price/Earnings per share

Dividend Yield 3.31% 0.86% 6.25% 757.58%

Tot. Dividends/Market Price

Book Value per share 0.98 0.81 1.74 2.24

Tot. Equity/Tot.SharesOutstanding

Input data for Working Capital Ratios: 2023

(£m)

2022(£m) 2023 (£m) 2022(£m)

Inventories 26.00 28.90 33.70 32.40

Account Receivables 848.30 682.30 573.10 560.70

Account Payables 1,314.40 1,245.10 960.60 874.50

Sales 4,755.00 4,591.10 3,150.90 2,807.50

Cost of Sales 4,601.10 4,468.30 3,172.30 2,981.00

WORKING CAPITAL RATIOS: 2023

(£m)

2022(£m) 2023 (£m) 2022(£m)

Inventory Days 2 Days 2 Days 4 Days 4 Days

(Inventories/Cost of Sales) x 365

Account Receivable Days 65 Days 54 Days 66 Days 73 Days

(Account Receivable/Sales) x 365

Account Payable Days 104 102 Days 111 Days 107 Days

FINANCIAL PERFORMANCE MANAGEMENT

Days

(Account Payable Days/Cost of Sales) x

365

Duration Working Capital Cycle -37 Days -45 Days -40 Days -30 Days

Stock Period + Credit Period - Payable

Period

Table 1: Calculation of ratios

(Source: FirstGroup, 2023; Mobico Group, 2023)