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UNIVLkSI1 CI WALLS NLWCk1

Newport bus|ness schoo|


Course 1|t|e M8A
Modu|e 1|t|e I|nanc|a| Ana|ys|s
Modu|e number G1066S3
Name Cmar Abu A| Seoud
Student Number 2082190S



Introduct|on
lmperlal 1obacco (l1) LC ls Lhe fourLh ma[or Lobacco corporaLlon worldwlde 1he company founded
ln 1901 ls based ln 8rlsLol uk 1he group produces and sells a wlde range of clgareLLes Lubes clgars
and rolllng papers ln over 130 counLrles uk ls Lhe groups ma[or markeL ln whlch lL owns over 43
markeL share (l1 Annual 8eporL 2009)
1he maln ob[ecLlve of Lhe company ls Lo malnLaln long Lerm susLalnable shareholder value 1o
reallze Lhls Lhe company lmplemenLs an excepLlonal sLraLegy of cosL opLlmlsaLlon sales growLh and
effecLlve cash uLlllzaLlon

1hls paper wlll deLermlne wheLher Lhe company ls achlevlng lLs long Lerm ob[ecLlves and followlng
lLs sLraLegles Lhrough scruLlny of lLs flnanclal performance beLween 2006 and 2009 llndlngs wlll be
compared wlLh Lhose of lLs maln compeLlLor 8rlLlsh Amerlcan 1obacco (8A1) LC for Lhe same
perlod

A varleLy of flnanclal analysls meLhods and raLlos are used Lo esLlmaLe Lhe flnanclal performance
uaLa used ln Lhls paper are collecLed from numerous sources namely companles' annual reporLs
academlc books web slLes newspaper arLlcles and reporLs

1rof|tab|||ty rat|os
roflLablllLy raLlos lllusLraLe Lhe [olnL lmpacL of llquldlLy debLs and asseLs managemenL on overall
operaLlng resulLs 1he raLlos examlne managemenL's operaLlng capablllLles and effecLlveness (L
8rlgham ! PousLon 2008)
11 keturn on Cap|ta| Lmp|oyed (kCCL)
8CCL raLlo ls used Lo measure proflLablllLy and proflclency of a companys caplLal lnvesLmenLs lL
collaLes caplLal lnvesLed wlLh operaLlng Lurnover Lo show how Lhe company ls uLlllzlng caplLal Lo
produce revenues (L McLaney ALrlll 2007)
1he Lable below lllusLraLes 8CCL raLlos for (l1) and (8A1) for Lhe years 20062009
kCCL 2006 2007 2008 2009
(I1) 371S 2730 726 1390
(8A1) 2130 22 212 2314

We observe a decllnlng Lrend ln (l1)'s 8CCL beLween 2006 and 2009 wlLh a conslderable drop
beLween 2006 and 2007 malnly aLLrlbuLed Lo Lhe boosL ln ad[usLed neL debL followlng Lhe
possesslon of CommonwealLh 8rands






1he dramaLlc decllne observed ln 2008 resulLed from borrowlng addlLlonal funds Lo flnance
acqulremenL of AlLadls 2009 8CCL almosL doubled buL remalned below 2006 and 2007 raLlos 1hls
rlse resulLed from Lhe long Lerm beneflLs of Lhe acqulslLlon of CommonwealLh and AlLadls whlch
lncreased revenues by lncreaslng Lhe company's markeL share neverLheless long Lerm debLs
hlndered 8CCL from approachlng 2006 and 2007 levels slnce Lhose debLs are accumulaLed and wlll
requlre years Lo repay

ln conLrasL 8CCL raLlos for (8A1) were sLable wlLh a sllghL varlaLlon beLween years 1hls sLablllLy ls a
consequence of Lhe balance beLween operaLlng proflL and caplLal employed ln each year (8A1)
uLlllzed caplLal Lo produce revenues ln an efforL Lo mlnlmlze accumulaLed long Lerm debLs by noL
borrowlng more funds
Comparlng 8CCL raLlos of Lhe Lwo companles flgures reporLed by (l1) ln 2006 and 2007 were hlgher
Lhan Lhose of (8A1) due Lo hlgh revenues galned by (l1) ln boLh years ln 2008 8CCL for (8A1)
remalned falrly sLable whlle LhaL of (l1) plunged sharply followlng Lhe borrowlng of funds for Lhe
acqulslLlon of varlous brands
As for 2009 (l1) conLlnued Lo suffer from long Lerm debLs 8CCL lncreased sllghLly due Lo lnvesLlng
dlfferenL brands whlch enhanced markeL shares and Lherefore revenues
AlLhough 8CCL for (8A1) ls hlgher Lhan (l1) l Lhlnk (l1) ls dolng beLLer slnce lL ls generaLlng more
proflL
12 Gross rof|t Marg|n (GM)
M raLlo ls used for evaluaLlng proflLablllLy of produclng and selllng goods before deducLlng oLher
expenses eg 1ax (L McLaney ALrlll)
As demonsLraLed ln Lhe Lable below (l1) M raLlos for 20062008 were falrly conslsLenL wlLh
flgures flucLuaLlng around 18
GM 2006 2007 2008 2009
(I1) 184 18S 188 204
(8A1) 708 S36 S34 S27

1hls conslsLency was a reflecLlon of Lhe company's operaLlons ln counLrles wlLh sound economlc
envlronmenL 1he mlnlmal rlse ln 2008 occurred due Lo lncreased revenues followlng lncrease ln
markeL share lnLernaLlonal brands acqulred ln Lhe lasL Lwo years conLrlbuLed Lo an lncrease ln
revenues expressed as a noLable llfL up ln 2009
ln conLrasL M raLlos for (8A1) were much hlgher Lhan Lhose for (l1) and for all years

1hls dlscrepancy ls due Lo (8A1)'s lower cosL of sales drlven by an exLreme cosL reducLlon approach
adopLed 2003 1hls LacLlc saved Lhe company more Lhan 1 bllllon pounds (v 8occlo AnalysL
Consumer SLaples 2008) ln 2006 (8A1) lncreased lLs volume of producLlon whlch was reflecLed as a
M raLlo hlgher Lhan Lhose observed ln Lhe 3 years LhaL followed
1he slgnlflcanL dlfference ln Lhe raLlos beLween Lhe Lwo companles could be furLher aLLrlbuLed Lo
hlgher revenues generaLed by (l1) slnce (l1) has more markeL shares Lhan (8A1)

13 Net rof|t Marg|n (NM)
nM raLlo porLrays Lhe company's performance ln respecL Lo lLs operaLlons ahead of Lhe effecL of
expenses (L 8rlgham M LhrhardL 2010)

nM raLlos for (l1) and (8A1) are shown below

NM 2006 2007 2008 2009
(I1) 1122 1148 S63 881
(8A1) 268 29 294 288

(l1)'s nM raLlos ln 2006 and 2007 were almosL ldenLlcal ulfferences beLween revenues and
operaLlng proflL for Lhose years were negllglble slnce Lhe company was lmplemenLlng a slmple buL
conLlnuous sLraLegy Lo lower cosLs and lncrease revenues

2008 raLlo exhlblLed a sharp decllne subsequenL Lo AlLadls acqulslLlon 1hls procuremenL alLhough
accompanled wlLh lncreased cosLs and expenses provlded enLry lnLo new markeLs and growLh ln
global markeL shares (new ?ork 1lmes 2007) ln 2009 a slgnlflcanL boosL occurred resulLlng from Lhe
remarkable growLh ln operaLlng proflL 1he lncrease followed hlghly achleved revenues lower
expenses and cosL reducLlon Lhrough acqulslLlon of AlLadls

Lxcludlng 2006 (8A1)'s nM raLlos for 20072009 were comparable a resulL of Lhe company's
prevlously adopLed cosL reducLlon approach 8aLlo for 2006 was sllghLly lower due Lo fewer
revenues reflecLed as lower operaLlng proflL
Comparlson of nM raLlos for boLh companles shows LhaL (8A1) ls dolng beLLer AlLhough (l1) ls
generaLlng more proflL lL has hlgher cosL of sales and expenses as a response Lo growLh ln markeL
share and consumers needs




2 L|qu|d|ty kat|os

LlquldlLy raLlos evaluaLe Lhe capablllLy of Lhe flrm Lo llquldaLe lLs culmlnaLed llablllLles and meeL
unpredlcLed shorL Lerm cash requlremenLs (u kleso ! WeygandL klmmel 2009)
21 Current kat|o (Ck)
C8 ls used Lo ascerLaln lf Lhe company has adequaLe levels of llquldlLy Lo fulfll lLs obllgaLlons (S 8ragg
2007)
C8 raLlos for (l1) and (8A1) are demonsLraLed below

Current kat|o 2006 2007 2008 2009
(I1) 072 1 086 1 068 1 063 1
(8A1) 12 1 117 1 098 1 117 1

LxamlnaLlon of Lhese raLlos suggesLs LhaL (l1) mlghL have noL been able Lo pay lLs shorL Lerm
obllgaLlons lurLher scruLlny reveals a growLh of C8 ln 2007 whlch also showed decllne ln sales and
lncreased lnvenLory levels followlng new healLh regulaLlons and smoklng ban ln publlc places
(8euLers 2007) ln 2008 C8 dropped noLlceably slnce (l1) sLarLed paymenL of loans obLalned for Lhe
acqulslLlon of Commonwealth and AlLadls 2009 wlLnessed anoLher sllghL decllne resulLlng from
accumulaLlon of shorL Lerm debLs (l1) Annual 8eporL 2009)

(8A1) malnLalned an almosL slmllar C8 over Llme wlLh a sllghL drop ln 2008 as an afLer effecL of Lhe
smoklng ban (8A1) slLuaLlon ls beLLer as lL was reLalnlng Lhe balance beLween asseLs and llablllLles
mlnlmlzlng borrowlng and lncreaslng lnvenLory levels whlch comblned wlll lncrease asseLs ln my
oplnlon boLh companles should boosL up Lhelr asseLs Lo deal wlLh any unexpecLed shorL Lerm
obllgaLlons neverLheless l Lhlnk (l1) wlll enhance lLs poslLlon ln Lhe nexL few years by dlsposlng of
lLs heavy loans



22Ac|d test kat|o (A1)
A1 raLlo ls used Lo assess lf Lhe company has adequaLe amounLs of shorL Lerm asseLs Lo handle lLs
lnsLanL llablllLles wlLhouL selllng lnvenLory (S 8ragg 2009)
A1 raLlos for (l1) and (8A1) are presenLed below
A1 rat|o
2006 2007 2008 2009
(I1)
04S 1 0SS 1 038 1 038 1
(8A1)
07S 1 074 1 062 1 0701

A1 raLlo ln 2006 lndlcaLes LhaL (l1) lnvenLory levels were ldeally malnLalned Lo fulfll markeL demand
whlle shorL Lerm llablllLles whlch have a ma[or lmpacL on A1 were acLually hlgh ln 2007 A1 raLlo
lncreased due Lo decrease ln lnvenLory levels followlng lmplemenLaLlon of lnvenLory conLrol and
lncrease of currenL asseLs resulLlng from growLh ln Lrade recelvables 2008 and 2009 raLlos were
dlmlnlshed because (l1)'s llablllLles lncreased afLer borrowlng funds Lo acqulre oLher brands
(llnanclal Llmes 2007)

lL ls observed LhaL A1 raLlos for (8A1) ln 2006 and 2007 were almosL slmllar AdopLlng a pollcy of
hlgh cosL reducLlon (8A1) shuL down operaLlons aL flve excess facLorles ln 2007 Lransferred Lo
Mexlco for cheaper labor cosL (I 8occlo) and mlnlmlzed llablllLles by noL borrowlng any funds

1he raLlo dropped ln 2008 ln response Lo Lhe smoklng ban 2009 raLlo showed a small lncrease due
Lo decllne ln shorL Lerm llablllLles followlng allocaLlon of more money from neL proflL Lo close
prevlous debLs (8A1 Annual reporL 2009)
Compared Lo A1 raLlos for (l1) Lhe dlfference ls qulLe obvlous slnce (l1) has more llablllLles and aL
Lhe same Llme hlgher lnvenLory levels Lo supply Lhe demands of cusLomers ln a larger global markeL
segmenL

3 Work|ng Cap|ta| Management kat|os (WCM)
WCM raLlos lllusLraLe how companles manage Lhelr asseLs and llablllLles and provlde a deLalled
assessmenL of lnLernal operaLlons (L McLaney ALrlll 2008)


31 Inventory Days
1hls raLlo lndlcaLes Lhe ablllLy of Lhe company Lo use lLs lnvenLorles efflclenLly Lhrough malnLenance
of approprlaLe lnvenLory processlng perlods ( PunL 2009)
1he Lable below lllusLraLes Lhe lnvenLory days for (l1) and (8A1)
Inventory Days
2006 2007 2008 2009
(I1)
30 36 62 S0
(8A1)
263 167 222 191

2006 and 2007 lnvenLory days were almosL slmllar because (l1) reLalned a sLable rhyLhm of
producLlon of goods A closer look reveals a consLanL lnvenLory volume wlLh a sllghL boosL ln
producLlon and cosL of sales 2008 and 2009 wlLnessed a noLlceable lncrease due Lo Lhe acqulslLlon
of varlous brands ln dlfferenL counLrles lncreased producLlon Lo fulfll Lhose markeLs followed
resulLlng ln a LoLal lncrease ln lnvenLorles and cosL of sales (8euLers 2008)
lnvenLory days for (8A1) are much hlgher Lhan (l1) for Lhe whole 4 years wlLh obvlous flucLuaLlon
1he varlaLlon beLween 2006 and 2007 resulLed from Lhe lncrease of cosL of sales due Lo Lhe lncrease
of producLlon volume Conversely 2008 lncrease was a resulL of Lhe smoklng ban lnLroduced ln
2007 whlch decreased sales and accumulaLed lnvenLory whlle malnLalnlng same cosL of sales (8CC
news 2007)ln 2009 a sllghL decrease appeared due Lo lncrease ln sales hence an lncrease ln
producLlon cosLs of sales and lnvenLory levels
32 kece|vab|es (Debtors) Days
1hls raLlo demonsLraLes Lhe number of days requlred Lo collecL Lhe company's recelvables from
borrowers converL lL lnLo cash and creaLe llquldlLy A hlgher number of days lndlcaLe lnefflclenL
managemenL of recelvables (! 1[la 2009)
8ecelvable uays for (l1) and (8A1) are presenLed ln Lhe followlng Lable
kece|vab|es Days 2006 2007 2008 2009
(I1) 31 34 47 37
(8A1) 44 46 S3 44

ln 2006 and 2007 (l1) needed a monLh Lo gaLher lLs recelvables 1hls was largely achleved Lhrough
deallngs wlLh commlLLed debLors operaLlng ln economlcally sLable counLrles (falr enough Lrade) (l1
annual reporL 2007) ln 2008 some lengLhenlng of days occurred due Lo hard economlc condlLlons ln
addlLlon smoklng ban decreased sales and lowered cash generaLlon prevenLlng debLors from
fulfllllng Lhelr obllgaLlons (88C news 2010)ln 2009 number of days decllned because revenues
lncreased buL Lrade recelvable sLayed almosL slmllar

1he days needed for (8A1) Lo collecL lLs recelvables are sllghLly hlgher Lhan buL sLlll wlLhln Lhe range
of days needed by (l1) (8A1) malnLalned Lhls range Lhrough ensurlng a sLable proporLlonallLy
beLween Lrade recelvables and revenues over years 8easons for Lhe sllghL varlaLlon of days
beLween years for (8A1) are slmllar Lo Lhose observed for (l1)
33 ayab|es (cred|tor) Days
ayables days esLlmaLe Lhe lengLh of Llme requlred Lo pay suppllers for goods and servlces Lhe
company obLalned on credlL ( McLaney, P Atrill 2008).
ayables days for (l1) and (8A1) are illustrated below:
ayab|es Days 2006 2007 2008 2009
(I1) S S 24 21
(8A1) 78 S3 S6 38

llgures lmply LhaL ln 2006 and 2007 (l1) was able Lo pay lLs credlLors ln a rapld flow slnce lL dldn'L
have a loL of shorL Lerm obllgaLlons ayables days lncreased ln 2008 and 2009 due Lo Lhe subsLanLlal
escalaLlon ln cosL of sales whlch also boosLed Lrade payables consequenL Lo acqulslLlon of oLher
companles (88C news 2007)
ln 2006 (8A1) needed 78 days Lo pay credlLors because lL had hlgher Lrade payables and lower cosL
of sales compared Lo (l1) 1hls dlscrepancy ls due Lo Lhe larger global markeL share conLrolled by
(l1) whlch enLalls producLlon of more producLs Lhus hlgher cosL of sale for (l1)
ln 2007 and 2008 (8A1) wlLnessed Lwo weeks decllne lnfluenced by lncrease of cosL of sales
followlng hlgher producLlon Lo meeL markeL demand Slmllar reasons apply Lo 2009
34 Work|ng Cap|ta| Cyc|e (WCC)
WCC (measured ln days) ls Lhe lengLh of Llme beLween Lhe acLual cash ouLflow for maLerlals and Lhe
acLual cash lnflow from sales" (u kldwell 8 arrlno 2009)
WCC for (l1) and for (8A1) are dlsplayed below
WCC 2006 2007 2008 2009
(I1) S7 6S 8S 66
(8A1) 22S 160 220 198

no slgnlflcanL change ln WCC beLween 2006 and 2007 was noLed (l1) was malnLalnlng a sLraLegy of
shorL Lerm WCC Lhrough keeplng all componenLs of Lhls cycle slmllar wlLhln each year (l1 Annual
8eporL 2006) ln 2008 hard economlc condlLlons lncreased recelvable and lnvenLory days Lhus Lhe
conslderable lncrease ln WCC 8educLlon of Lhe same varlables led Lo shorLenlng of WCC ln 2009

1he cuLLlng cosLs sLraLegy followed by (8A1) resulLed ln slgnlflcanL decrease beLween 2006 and 2007
Akln Lo (l1) hard economlc condlLlons LranslaLed lnLo a noLlceable lncrease ln 2008 8aLlonallzaLlon
of Lhe 2009 decrease ls slmllar Lo LhaL of (l1)
llgures of (l1)'s WCC when compared Lo (8A1)'s are much lowers lndlcaLlng LhaL (l1) had more
llquldlLy A shorLer WCC makes cash readlly avallable for oLher uses such as lnvesLlng ln new caplLal
or spendlng on lnfrasLrucLure eLc
4 Long 1erm So|vency kat|os
1hese raLlos examlne Lhe capablllLy of Lhe organlzaLlon Lo fulfll lLs long Lerm llablllLles and
obllgaLlons (k aLra 2006)
41 Gear|ng kat|o
1hls raLlo compares LoLal equlLy and borrowed funds and lllusLraLes Lhe degree Lo whlch Lhe
company's acLlvlLles are funded by owners and credlLors (L McLaney ALrlll 2008)

Gear|ng kat|o
2006 2007 2008 2009
(I1) 83 78 60 61
(8A1) 1S 46 S7 SS

earlng raLlos a measure of (l1)'s flnanclal leverage are qulLe hlgh for Lhe whole Llme perlod
2006 and 2007 saw lncrease of borrowed funds for acqulslLlon of CommonwealLh brand 2008 raLlo
alLhough lower sLlll remalned hlgh slnce exLra loans were needed for Lhe acqulslLlon of AlLadls 2009
raLlo reflecLed accumulaLed long Lerm debLs from prevlous years (new ?ork 1lmes 2007)

earlng raLlos for (8A1) are lower Lhan (l1) ln all years A boosL occurred ln 2007 due Lo funds
borrowed for acqulslLlon of Scandlnavlan 1obacco (llnanclal 1lmes 2007) AnoLher rlse followed
acqulslLlon of 1ekel group ln 2008 whlch lncreased long Lerm debLs ln 2009 (8A1) was sLlll sufferlng
from long Lerm debL accumulaLed ln Lhe lasL 2 years

ln my oplnlon alLhough (8A1)'s slLuaLlon ls beLLer Lhan (l1)'s boLh are followlng Lhe rlsky paLh of
more borrowlng and are vulnerable Lo any decllne ln Lhe buslness cycle LnLry lnLo new markeLs
mlghL enable Lhem Lo generaLe more proflL and decrease Lhelr debLs


42 Interest Cover (IC)
lC esLlmaLes Lhe sum of operaLlng proflL readlly avallable Lo cover up lnLeresL payable (L McLaney
ALrlll 2008)
lC Llmes for (l1) and (8A1) are presenLed ln Lhe followlng Lable
IC ( t|mes) 2006 2007 2008 2009
(I1) 31 28 12 1
(8A1) 6S 7 S4 7

lollowlng (l1)'s acqulslLlon of CommonwealLh and AlLadls an lncrease ln flnanclal cosLs and a
decrease ln lC Llme were noLed ln 2007and 2008 (88C news 2007) ln 2009 lC reduced sllghLly due
Lo accumulaLed flnanclal cosLs
Comparlson of lC flgures for boLh companles shows LhaL (8A1)'s flgures are much beLLer LhroughouL
1hls sLaLus ls [usLlfled by hlgher cosL of sales for (l1) (l1) has larger markeL share and hlgher
producLlon raLe whlch comblned decrease operaLlng proflL AcqulslLlon of varlous brands lncreased
flnanclal cosL compared Lo (8A1)
ln my oplnlon (l1) wlll enhance lLs lC wlLhln Lhe nexL few years Lhrough merglng lnLo new markeLs
Lhus generaLlng more revenues
Conc|us|on
uesplLe hard economlc condlLlons and conslderable rlse ln lLs debL obllgaLlons beLween 2007 and
2008 l1 succeeded ln malnLalnlng lLs shareholders value 1he company managed lLs worklng caplLal
qulLe remarkably llnklng shorL Lerm pollcy of producL porLfollo dlverslflcaLlon lncreaslng sales and
revenues wlLh long Lerm sLraLegy of effecLlve cash uLlllzaLlon for more caplLal lnvesLmenL and larger
markeL shares





kef|ect|ve Iourna|
llnanclal analysls course was really helpful for me lL enhanced my plannlng and Llme managemenL
skllls and broadened my flnanclal knowledge lurLhermore lL lnLroduced me Lo varlous research
Lechnlques and challenglng sLudylng approaches
8esearchlng and flndlng arLlcles whlch wlll provlde supporL Lo my flndlngs and polnLs of vlew was
noL an easy Lask CLher problems l encounLered were how Lo sLarL wrlLlng or from where Lo begln
and llmlLlng my asslgnmenL Lo Lhe allocaLed number of words allowed slnce l had no prevlous
experlence or knowledge ln wrlLlng asslgnmenLs
AfLer compleLlng Lhls asslgnmenL and looklng back Lo Lhe way l dld lL l reallze LhaL l need Lo enhance
my research Lechnlques furLher ln parLlcular l need Lo modlfy Lhe way l research necessary sources
Lo arrlve aL Lhe preclse lnformaLlon needed for Lhe asslgnmenL AL Lhe same Llme l reallzed LhaL l am
capable of looklng aL Lhlngs ln a more comprehenslve way and evaluaLe Lhem accordlng Lo my
undersLandlng
llnally glven my lack of prevlous experlence ln asslgnmenL wrlLlng l Lrled Lo do my besL
neverLheless l am confldenL LhaL l galned Lhe necessary skllls and experlence Lo perform any fuLure
asslgnmenLs ln a beLLer manner
lease accepL my slncere Lhanks for Lhls beneflclal and dellghLful course!












Append|x

. Ratios calculations

Imper|a| 1obaccos 2006 f|nanc|a| kat|os

1 8eLurn on caplLal employed CperaLlng proflL / CaplLal Lmployed * 100

1311 / 3328 * 100 3713

* CaplLal Lmployed 1oLal LqulLy + Long 1erm uebL 398 + 2930

2 roflL margln ross proflL/8evenues *100

2149 / 11676 * 100 184

3 roflL Margln CperaLlng proflL / 8evenues * 100

1311 / 11676 * 100 1122

4 CurrenL 8aLlo CurrenL asseLs / CurrenL llablllLles

2161 / 3002 0721

3 Acld LesL 8aLlo CurrenL asseLs lnvenLory / CurrenL LlablllLles
2161 789 / 3002 043

6 lnvenLory 'SLock' uays lnvenLory / CosL of sales * 363

789 / 9327 * 363 3022

7 8ecelvables 'uebLors' uays 1rade recelvables / 8evenues * 363

1006 / 11676 * 363 3144

8 ayables 'CredlLors' uays 1rade payable / CosL of sales * 363

123 / 9327 * 363 47

9 CCC 8ecelvables 'uebLors' uays + lnvenLory 'SLock' uays ayables 'CredlLors' uays

3144 + 3022 47 37

10 earlng 8aLlo Long 1erm uebLs / 1oLal equlLy + Long 1erm uebLs * 100

2930 / 3328 * 100 83


11 lnLeresL Cover operaLlng roflL / llnance CosL 1311 / 426 307 1lmes

Imper|a| 1obaccos 2007 f|nanc|a| kat|os

1 8eLurn on caplLal employed CperaLlng proflL / CaplLal Lmployed * 100

1418 / 3194 * 100 273

* CaplLal Lmployed 1oLal LqulLy + Long 1erm uebL 1141 + 4033 3194

2 ross proflL margln ross proflL/8evenues *100

2290 / 12344 * 100 183

3 roflL Margln CperaLlng proflL / 8evenues * 100

1418 / 12344 * 100 1148
4 CurrenL 8aLlo CurrenL asseLs / CurrenL llablllLles
2733 / 3172 08671



3 Acld LesL 8aLlo CurrenL asseLs lnvenLory / CurrenL LlablllLles
2733 998 / 3172 033

6 lnvenLory 'SLock' uays lnvenLory / CosL of sales * 363
998 / 10034 * 100 3623
7 8ecelvables 'uebLors' uays 1rade recelvables / 8evenues * 363

1149 / 12344 * 363 3397

8 ayables 'CredlLors' uays 1rade payable / CosL of sales * 363

140 / 10034 * 363 308

9 CCC 8ecelvables 'uebLors' uays + lnvenLory 'SLock' uays ayables 'CredlLors' uays

3397 + 3623 308 6312

10 earlng 8aLlo Long 1erm uebLs / 1oLal equlLy + Long 1erm uebLs * 100

4033 / 3194 * 100 7803

11 lnLeresL Cover operaLlng roflL / llnance CosL 1418 / 499 284
1lmes



Imper|a| 1obaccos 2008 f|nanc|a| kat|os

1 8eLurn on caplLal employed CperaLlng proflL / CaplLal Lmployed * 100

1137/13916 * 100 726

* CaplLal Lmployed 1oLal LqulLy + Long 1erm uebL 6336 + 9360 13916

2 ross proflL margln ross proflL/8evenues *100

3863 / 20328 * 100 1881

3 neL proflL Margln CperaLlng proflL / 8evenues * 100

1137 / 20328 * 100 363

4 CurrenL 8aLlo CurrenL asseLs / CurrenL llablllLles
6379 / 9638 068 1

3 Acld LesL 8aLlo CurrenL asseLs lnvenLory / CurrenL LlablllLles
6379 2838 / 9638 0383

6 lnvenLory 'SLock' uays lnvenLory / CosL of sales * 363
2838 / 16663 * 363 626

7 8ecelvables 'uebLors' uays 1rade recelvables / 8evenues * 363

2630 / 20328 * 363 471

8 ayables 'CredlLors' uays 1rade payable / CosL of sales * 363

1096 / 16663 * 363 24

9 CCC 8ecelvables 'uebLors' uays + lnvenLory 'SLock' uays ayables 'CredlLors' uays

471 + 626 24 837

10 earlng 8aLlo Long 1erm uebLs / 1oLal equlLy + Long 1erm uebLs * 100

9360 / 13916 * 100 6006

11 lnLeresL Cover operaLlng roflL / llnance CosL
1137 / 938 123 1lmes

Imper|a| 1obaccos 2009 f|nanc|a| kat|os

1 8eLurn on caplLal employed CperaLlng proflL / CaplLal Lmployed *100

2337/16771 * 100 139

* CaplLal Lmployed 1oLal LqulLy + Long 1erm uebL 6393 + 10176

2 ross proflL margln ross proflL/8evenues *100

3316/26317 * 100 2004

3 neL proflL Margln CperaLlng proflL / 8evenues * 100

2337/26317 * 100 881

4 CurrenL 8aLlo CurrenL asseLs / CurrenL llablllLles
7263 / 11420 06331
3 Acld LesL 8aLlo CurrenL asseLs lnvenLory / CurrenL LlablllLles
7263 2923 / 11420 0379
6 lnvenLory 'SLock' uays lnvenLory / CosL of sales * 363

2923/21201 * 363 3033

7 8ecelvables 'uebLors' uays 1rade recelvables / 8evenues * 363
2681/26317 * 363 369
8 ayables 'CredlLors' uays 1rade payable / CosL of sales * 363

1247/21201 * 363 2146

9 CCC 8ecelvables 'uebLors' uays + lnvenLory 'SLock' uays ayables 'CredlLors' uays
369 + 3033 2146 6379

10 earlng 8aLlo Long 1erm uebLs / 1oLal equlLy + Long 1erm uebLs *100
10176 / 6393 + 10176 * 100 6067

11 lnLeresL Cover operaLlng roflL / llnance CosL 2337/2372 09 1lmes

8r|t|sh Amer|can 1obaccos 2006 f|nanc|a| kat|os

1 8eLurn on caplLal employed CperaLlng proflL / CaplLal Lmployed * 100

2622 / 12283 * 100 213

* CaplLal Lmployed 1oLal LqulLy + Long 1erm uebL 6688 + 3397 12283


2 ross proflL margln ross proflL/8evenues *100

6912 / 9762 * 100 708

3 neL proflL Margln CperaLlng proflL / 8evenues * 100

2622 / 9762 * 100 268

4 CurrenL 8aLlo CurrenL asseLs / CurrenL llablllLles

3391 / 4433 121

3 Acld LesL 8aLlo CurrenL asseLs lnvenLory / CurrenL LlablllLles

3391 2036 / 4433 073

6 lnvenLory 'SLock' uays lnvenLory / CosL of sales * 363

2036 / 2830 * 363 2633

7 8ecelvables 'uebLors' uays 1rade recelvables / 8evenues * 363
1083 / 9762 * 363 403

8 ayables 'CredlLors' uays 1rade payable / CosL of sales * 363

611 / 2830 * 363 783

9 CCC 8ecelvables 'uebLors' uays + lnvenLory 'SLock' uays ayables 'CredlLors' uays

403 + 2633 783 2233

10 earlng 8aLlo Long 1erm uebLs / 1oLal equlLy + Long 1erm uebLs * 100

1142 / 7830 * 100 146

11 lnLeresL Cover operaLlng roflL / llnance CosL 2622 / 399 637 1lmes

8r|t|sh Amer|can 1obaccos 2007 f|nanc|a| kat|os

1 8eLurn on caplLal employed CperaLlng proflL / CaplLal Lmployed * 100

2903 / 13209 * 100 22

* CaplLal Lmployed 1oLal LqulLy + Long 1erm uebL 7098 + 6111 13209

2 ross proflL margln ross proflL/8evenues *100
3370 / 10018 * 100 336
3 neL proflL Margln CperaLlng proflL / 8evenues * 100
2903 / 10018 * 100 29

4 CurrenL 8aLlo CurrenL asseLs / CurrenL llablllLles

3366 / 4334 1171

3 Acld LesL 8aLlo CurrenL asseLs lnvenLory / CurrenL LlablllLles

3366 1983 / 4334 074

6 lnvenLory 'SLock' uays lnvenLory / CosL of sales * 363

1983 / 4333 * 363 1672

7 8ecelvables 'uebLors' uays 1rade recelvables / 8evenues * 363

1272 / 10018 * 363 463

8 ayables 'CredlLors' uays 1rade payable / CosL of sales * 363

633 / 4333 * 363 333


9 CCC 8ecelvables 'uebLors' uays + lnvenLory 'SLock' uays ayables 'CredlLors' uays
463 + 1672 333 1602
10 earlng 8aLlo Long 1erm uebLs / 1oLal equlLy + Long 1erm uebLs * 100
6111 / 13209 * 100 4626
11 lnLeresL Cover operaLlng roflL / llnance CosL

2903 / 403 717 1lmes

8r|t|sh Amer|can 1obaccos 2008 f|nanc|a| kat|os

1 8eLurn on caplLal employed CperaLlng proflL / CaplLal Lmployed * 100

3372 / 16831 * 100 2120

* CaplLal Lmployed 1oLal LqulLy + Long 1erm uebL 7213 + 9636 16831

2 ross proflL margln ross proflL/8evenues *100

6478 / 12122 * 100 334

3 neL proflL Margln CperaLlng proflL / 8evenues * 100

3372 / 12122 *100 2946

4 CurrenL 8aLlo CurrenL asseLs / CurrenL llablllLles

8742 / 8901 0981

3 Acld LesL 8aLlo CurrenL asseLs lnvenLory / CurrenL LlablllLles
8742 3177 / 8901 062

6 lnvenLory 'SLock' uays lnvenLory / CosL of sales * 363

3177 / 3209 * 363 2226

7 8ecelvables 'uebLors' uays 1rade recelvables / 8evenues * 363

1789 / 12122 * 363 3386

8 ayables 'CredlLors' uays 1rade payable / CosL of sales * 363

808 / 3209 * 363 366

9 CCC 8ecelvables 'uebLors' uays + lnvenLory 'SLock' uays ayables 'CredlLors' uays
3386 + 2226 366 21986



10 earlng 8aLlo Long 1erm uebLs / 1oLal equlLy + Long 1erm uebLs * 100

9636 / 16831 * 100 371

11 lnLeresL Cover operaLlng roflL / llnance CosL
3372 / 638 342 1lmes


British American Tobacco 2009 financial Ratios:

1 8eLurn on caplLal employed CperaLlng proflL / CaplLal Lmployed * 100

4101 / 17718 * 100 2314
* CaplLal Lmployed 1oLal LqulLy + Long 1erm uebL 7912 + 9806 17718

2 ross proflL margln ross proflL/8evenues *100

7493 / 14208 * 100 327

3 neL proflL Margln CperaLlng proflL / 8evenues * 100

4101 / 14208 * 100 288


4 CurrenL 8aLlo CurrenL asseLs / CurrenL llablllLles
8106 / 6916 117 1
3 Acld LesL 8aLlo CurrenL asseLs lnvenLory / CurrenL LlablllLles
8106 3261 / 6916 07
6 lnvenLory 'SLock' uays lnvenLory / CosL of sales * 363
3261 / 6208 1917
7 8ecelvables 'uebLors' uays 1rade recelvables / 8evenues * 363
1732 / 14208 * 363 443

8 ayables 'CredlLors' uays 1rade payable / CosL of sales * 363
630 / 6208 * 363 382

9 CCC 8ecelvables 'uebLors' uays + lnvenLory 'SLock' uays ayables 'CredlLors' uays
443 + 1917 382 198

10 earlng 8aLlo Long 1erm uebLs / 1oLal equlLy + Long 1erm uebLs * 100

9806 / 17718 * 100 333

11 lnLeresL Cover operaLlng roflL / llnance CosL
4101 / 381 703 1lmes


.Refeience List

1 88A S 2007 8osloess totlos ooJ fotmolos2
oJ
eJo uSA !ohn Wlley and Sons

2 88A S 2009 coottolletsblp 1be wotk of tbe Moooqetlol Accoootoot8
Lh
edn uSA !ohn
Wlley and Sons


3 88lPAM L PCuS1Cn ! 2008 looJomeotols of lloooclol Moooqemeot 6
Lh
ednuSA
Cengage Learnlng

4 88lPAM L LP8PA8u1 M 2010 lloooclol Moooqemeot 1beoty ooJ ltoctlce13
Lh

ednuSA Cengage Learnlng


3 PCML ! WACPCWlCZ ! 2008 looJomeotols of floooclol moooqemeot13
Lh
edn
Ldlnburgh earson LducaLlon

6 Pun1 2009 ttoctotloq metqets ocpolsltloos o qolJe to cteotloq sbotebolJet voloe4
Lh

ednuSA Aspen ubllshers


7 kluWLLL u A88lnC 8 2009 looJomeotols of cotpotote lloooce uSA !ohn Wlley and
Sons

. klLSC u WL?Anu1 ! klMMLL 2009. lloooclol Accoootloq7
Lh
ednuSA !ohn Wlley
and Sons


9 MCLAnL? L A18lLL 2007 Accoootloq Ao lottoJoctloo 4
Lh
edn Ldlnburgh earson
LducaLlon

10 A18A k 2006 Accoootloq ooJ lloooce fot Moooqets new uelhl Sarup Sons


111!lA ! 2009 8ollJloq lloooclol MoJels 2
oJ
edn uSA McrawPlll rofesslonal

128A1 2011 lovestots WWW
hLLp//wwwbaLcom/servleL/SMerge?malnurl2lgroup2lslLes2luk__3mnfennsf2l
vwagesWebLlve2luC32Ak343lopendocumenL26amp38Skn3u1 Accessed on
(23Lh March 2011)

1388C 2007 88c 8osloesses WWW hLLp//newsbbccouk/1/hl/buslness/7068673sLm
Accessed on (31Lh March 2011)

14lML8lAL1C8ACCC 2011 Aooool kepott Accooots 2009 WWW hLLp//wwwlmperlal
Lobaccocom/flles/flnanclal/reporLs/ar2009/lndexasp Accessed on (21Lh March 2011)

13lML8lAL1C8ACCC 2011 lloooclol totemeot WWW hLLp//wwwlmperlal
Lobaccocom/flles/flnanclal/reporLs/lr2007/lndexasp?pageld28
Accessed on (21Lh March 2011)

16lML8lAL1C8ACCC 2011 lovestots WWW hLLp//wwwlmperlal
Lobaccocom/lndexasp?page130 Accessed on (21Lh March 2011)

17!LllL8lLS 1 2011 lmperlal achleves Lurnaround ln sales 1bls ls Mooey Cnllne ArLlcle
hLLp//wwwLhlslsmoneycouk/markeLs/arLlclehLml?ln_arLlcle_ld322186ln_page_ld3
Accessed on (29
Lh
March 2011)


18 C11L8 M 2008 8A1 ln Lalks Lo buy Scandlnavlan 1obacco brands ku1k Cnllne
ArLlcle hLLp//wwwreuLerscom/arLlcle/2008/02/28/usbaLscandlnavlan
lduSL2836869320080228 Accessed on (1
st
Aprll 2011)

19C11L8 M 2008 Cheaper brands and AlLadls boosL lmperlal 1obacco ku1k Cnllne
ArLlcle hLLp//ukreuLerscom/arLlcle/2008/11/23/uklmperlal
lduk18L4AC18u20081123?pagenumber1 Accessed on (26
Lh
March 2011)


208C8L81S M 2010 lewer people qulL smoklng ln recesslon 88c Cnllne !ournal
hLLp//wwwbbccouk/news/healLh11713314 Accessed on (28
Lh
March 2011)

21Sl8un ! 2008 lmperlal proflLs hlL by AlLadls deal buL sales power ahead 1be 1eleqtopb
Cnllne !ournal
hLLp//wwwLelegraphcouk/flnance/newsbysecLor/eplc/lmL/3318926/lmperlalproflLshlL
byAlLadlsdealbuLsalespoweraheadhLml Accessed on (4
Lh
Aprll 2011)

22WL8ullL8 ! 8u8nL11 8 2007 lmperlal 1obacco Lo 8uy AlLadls for $17 8llllon 1be
Newyotk 1lme Cnllne !ournal
hLLp//wwwnyLlmescom/2007/07/18/buslness/19LobaccohLml Accessed on (30Lh March
2011)

23. urry M 2007 lmperlal's AlLadls LlmeLable sllps lloooclol tlmes Cnllne !ournal
hLLp//wwwfLcom/cms/s/0/2927900886b711dca3ff0000779fd2achLml#axzz1lsd43lr
(2
nd
March 2011)

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