the rank group plc chris macquarrie acg2021 section

THE RANK GROUP PLCCHRIS MACQUARRIE ACG2021 SECTION

Executive Summary

There has been a a decline in profitablity over the last business year. Assets are decreasing while

debt is increasing these two should not fall at the same time there should be a reciprocal

relationship. The Stock price has also fallen from 34pts over the last year and has seen a 32pt drop from the beginning of this year. The Rank Group needs to make a financial turnaround before they

are forced to start downsizing.

http://www.rank.com/rnk/investor/fininfo/reports/2006/.

Part A. Introduction

• Mike Smith CEO• London, England• December 31, 2005• International Gaming & Leisure Group

– Casinos, online gambling

– Hard Rock Café: venues, casinos, merchandise hotel, and restaraunt

• Worldwide; primarily North America & Europe

Part A. Audit Report

• Audit Committee: Chairman- Oliver Stockman, Brandon Oneil, John Suderland, John Warren

Part A. Stock Market Information

• 234.59 10/10/06

• 78pt trading range

• Dividend per share: 10.3 12/31/05

• HOLD

Part B. Industry Situation and Company Plans

In your own words, describe the industry and its outlook; then summarize the company’s future plans based on your research (cite at

least two sources) and on reading the annual report (be sure to read the letter to the

stockholders). Include links to any relevant information.

Part C. Income Statement

•Multistep format

•Insert a table showing the company’s gross profit, income from operations, and net income for the last two years.

•There has been a noticeable decrease over the past year.

Part C. Balance Sheet

•All non-current assets have decreased with the exception of deffered assets. Trade and recievables have seen 232.4m pound decline. Total Assets have seen 203.3m decline. Total Liabilities have increased not quite as rapidly at 29m. The Balance Sheet of 2004 is a much more attractive investment than the one of 2005.

Part C. Statement of Cash Flows

•Are cash flows from operations more or less than net income for the past two years?

•Is the company growing through investing activities, i.e., buying property, plant and equipment and other long lived assets?

•What is the company’s primary source of financing, i.e., long-term loans, stock sales?

•Overall, has cash increased or decreased over the past two years?

Part D. Accounting Policies

•What are the significant accounting policies, if any, relating to revenue recognition, cash, short-term investments, inventories, and property and equipment?

•List the topics of the notes to the financial statements.

Part E. Financial AnalysisLiquidity Ratios

• Working Capital– 2004: 443.3m 2005: 390.3m (figures are in pounds)

• Current Ratio– 2004: 8.04 2005: 2.21

• Receivable turnover– 2004: 2.74 2005: 6.49

• Average days’ sales uncollected– 2004: 133.21 2005: 56.24

• Inventory turnover– 2004: 9.08 2005: 5.83

• Average days’ inventory on hand– 2004: 40.2 2005: 62.61

Part E. Financial AnalysisProfitability Ratios

• Profit margin– 2004: .18 2005: .06

• Asset turnover– 2004: .41 2005: .54

• Return on assets– 2004: .07 2005: .03

• Return on equity– 2004: .36 2005: 8.55

Part E. Financial AnalysisSolvency Ratio

• Debt to equity– 2004: 3.35 2005: 8.55– The debt to equity has increased by more than double

over the year. This is most realized in the difference in the Stock Holders Equity it decreased from 391.3 million pounds in 04 to 156.7m pounds in 05.

Part E. Financial AnalysisMarket Strength Ratios

• Dividend yield– 2004: .04 2005: .04