Analysis of Financial Statements for Whitbread Plc

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Student Number: 10264502                        

Course Title:        MBA (General)                

Lecturer Name: Enda Murphy                

Module/Subject Code: B9AC106        

Module/Subject Title: Financial Analysis        

Assignment Title: Analysis of Financial Statements for Whitbread Plc         

No of Words:        3354 (Excluding Citation, Bibliography, Table of Content and Charts)        

Table of Content

Introduction..............................................................................................................................3

Ratio Analysis of Whitbread  ..................................................................................................4

Profitability Ratio.....................................................................................................................4

Gross Profit Margin..................................................................................................................5

Profit before Tax (PBT) Margin...............................................................................................6

Return on Equity.......................................................................................................................6

Efficiency Ratio.........................................................................................................................7

Average Receivable Collection Days........................................................................................7

Average Payable Days...............................................................................................................8

Stock Days…………….............................................................................................................9

Liquidity Ratio...........................................................................................................................9

Current Ratio.............................................................................................................................9

Quick Ratio..............................................................................................................................10

Financial Leverages.................................................................................................................10

Gearing Ratio...........................................................................................................................11

Debt to equity Ratio………………………………………………………………………….11

Investment Ratios.....................................................................................................................12

Earnings per Share Ratio..........................................................................................................12

Price/Earning............................................................................................................................12

Valuation Methods for Whitbread............................................................................................13

Price Earning Multiple.............................................................................................................13

Discounted Cash Flow Method................................................................................................13

Recommendations for Proceed on Investment.........................................................................14

Bibliography.............................................................................................................................15

Introduction of Whitbread PLC

Whitbread has built some of the UK’s most successful hospitality brands, including Premier Inn and Costa. Company employs over 45,000 people in the UK and serves 25 million customers every month. Whitbread strategy is to grow our leading brands with a clear focus on returns to deliver substantial shareholder value.

Whitbread is a multinational hotel, coffee shop and restaurant company headquartered in Dunstable, United Kingdom. Its largest division is Premier Inn, which is the largest hotel brand in the UK with around 700 hotels and over 59,000 rooms. Its Costa Coffee chain has 3,080 shops across 29 countries as of 2015 and is the world's second-largest international coffee shop chain. Its other brands include the restaurant chains Beefeater Grill, Brewers Fayre, Table Table and Taybarns.

 Whitbread use this Customer Heartbeat schematic to describe business philosophy.

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Whitbread Annual Report and Accounts 2014/15

Its vision is to grow legendary brands by building a strong Customer Heartbeat and innovating to stay ahead. It’s their Winning Teams that make everyday experiences special for company’s customers so they come back time and again, driving Profitable Growth.

Whitbread have demonstrated its ability to build strong brands through the consistent delivery of operational excellence and a great customer experience in people–intensive businesses. They set their sights on ambitious and fast–paced profitable growth and, in 2011, set out their first milestones which were to achieve 65,000 Premier Inn rooms by 2016 and £1.3 billion of system sales in Costa. Company is well on track to achieving the 2016 Premier Inn milestone and has already met the Costa milestone. Whitbread extended their milestone in 2013 and they can now see further growth opportunities. Company have therefore announced new milestones to achieve around 85,000 UK rooms and c.£2.5 billion of system sales in Costa in 2020. (Whitbread Annual Report and Accounts 2014/15)

Present Market

Listed on the London Stock Exchange, Whitbread PLC is a member of the FTSE 100 and the FTSE4Good indices.

Ratios Analysis of Whitbread

Financial ratios provide a quick and relatively simple means of assessing the financial health of a business. By calculating a little number of proportions it is frequently possible to develop a decent photo of the position and execution of a business. Ratio Analysis provides input for evaluating and comparing a company to its peers, or to an industry benchmark.

(Peter Atrill, Financial Management for Decision Makers, Fifth Edition Page 68)