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Evaluate the performance of PSA Groupe in the following areas, using ratio analysis

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Accounting for Managers (ACFI5020)

Assignment 2017/18

 

Shareholders and lenders, whilst not being the only stakeholders, provide capital to companies because they seek a return commensurate with the level of risk that they are willing to take.

It is within this context that the price of PSA Groupe ordinary shares has experienced a mixed performance over a number of years.  The last ten year’s share price performance can be seen on the graph below:

 

(http://www.hl.co.uk/shares/shares-search-results/p/peugeot-sa-eur-6)

In the world recession of 2008/2009 the share price fell to a low of €8.20 and then made a recovery. However, in 2012 the share price fell to an all-time low of €3.64 before climbing to a price of €19.75 on 27/09/17.

PSA Groupe is the manufacturer of European car brands such as Peugeot and Citroen and in 2017 also acquired the Opel and Vauxhall brands from General Motors. It is the second largest car manufacturer in the European car market, after Volkswagen, and currently has about 17% of the market (http://www.autoexpress.co.uk/vauxhall/98596/psa-completes-19bn-deal-with-gm-to-buy-opel-and-vauxhall)

You are required to do as follows:

Task One

Using the Annual Report and Accounts of PSA Groupe for the following years (see links):

2015 & 2016 https://www.groupe-psa.com/content/uploads/2017/02/rapport-annuel-2016-VA.pdf

2013 & 2014 https://www.groupe-psa.com/content/uploads/importedmedia/annual-results-2014-en.pdf

2011 & 2012 https://www.companyreporting.com/sites/default/files/annual-report-index/peugeot-sa-annual-results-report-2012.pdf

You should:

(a)    Evaluate the performance of PSA Groupe in the following areas, using ratio analysis:

-          Profitability

-          Liquidity/Solvency

-          Working capital efficiency

-          Long term financial structure

-          Investors’ perspective

You may also use earlier years’ financial accounts to supplement your analysis if you wish to be specific with certain trends that you have identified (see below for specific instructions).

In addition you could also consider the performance of PSA in comparison with its peer group of competitors.

You should summarise your findings and make particular reference to the interests of the different stakeholders of the company.

When undertaking any calculations use the ‘Total’ figures from the financial statements.

Note: Any accounting ratios for PSA must be calculated (and workings shown) and not extracted from external databases, although, further analysis may be supported by downloading ratios from external databases for competitor companies.                                                                                                                                                       (40%)

(15% will be awarded with regard to the relevance and accuracy of the ratios and 25% will be rewarded according to the quality of your written analysis)

             When completing Part (a) take the following into account:           

1. 5 years of analysis would be worthwhile.
2.  Benchmarking to at least one competitor
3. Make sure that you explain why the ratios are changing and what the              implications or conclusions of this are.
4. Don`t forget to comment on the views of specific stakeholders.
5. Contemplate your presentation. This work lends itself to the use of graphs, charts, tables and so on.

Task Two

Considering your response to Task One, and any further reading, you are required to provide advice, accompanied by rationale, as to whether you would recommend a buy, sell or hold (if they are already owned) policy for investors/potential investors in PSA shares.(10%