ECONOMIC AND FINANCIAL MANAGEMENT
Table of Contents
1.0 Introduction    3
2.0 Industry Overview    3
3.0 Financial Ratio Analysis    4
3.1 Profitability Analysis    4
3.2 Liquidity Analysis    6
3.3 Solvency Analysis    8
3.4 Efficiency Analysis    9
4.0 Recommendation    11
5.0 Conclusion    12
References    14
1.0 Introduction
The analysis of financial performance is considered to be a critical aspect in the study of business and finance. This is because of the fact that such analysis takes into consideration lot of internal as well as external factors of the business which are important for the business operation as well as its success and failure in the long term. The instant report deals with such financial performance analysis of an organisation named Marie Curie, a UK based charity business.
In the report, the researcher has presented the industry overview at the very beginning of the paper followed by the financial ratio analysis. In order to conduct such analysis, the researcher has referred last three years financial data from respective periods’ annual report and calculated financial ratios from four different dimensions namely, profitability, liquidity, solvency and efficiency. Finally, based on the same, recommendations have been provided followed by the ending note to the paper.
2.0 Industry Overview
The charity has always been an important industry in the non-profit segment within the UK and it has been observed that the charity organisations have gradually been increasing their operation within the UK and outside as well over the last several years. The figure here shows that the number of charities in the country has been increasing gradually. The period of depression in the year 2007 to 2008 witnessed a fall in the charity operations within the country which thereafter again increased steadily.
Figure 1: Number of Charities in the UK (2000 to 2020)
(Source: Clark, 2020)
A data report shows that there more around 760,000 people employed in this industry segment within the country and hence the segment is considered to be an important contributor towards the national employment scenario as well. Some of the prominent names in the charity in the country are like Transparent Hands, Crowdcube, Funding Circle, JustGiving, Seedrs etc (Transparent Hands, 2020).
3.0 Financial Ratio Analysis
3.1 Profitability Analysis
    Particulars
    2019
    2018
    2017
    Profitability Ratios:
     
    
     
    Net Profit Ratio
    3%
    1%
    -4%
    Return on Equity
    4%
    2%
    -6%
Table 1: Profitability Ratios of Marie Curie for 2017 to 2019
(Source: Mariecurie.org.uk, 2020)
An insight into the profitability figure of the charity may denote the fact that the management of the charity has been able to increase the profitability position consistently over the last three years. In the year 2017, the charity was not able to see any surplus figure and the net profit ratio stood at negative 4% which subsequently got increased to almost 3% in the year 2019.
Figure 2: Net Profit Ratio of Marie Curie for 2017 to 2019
(Source: Mariecurie.org.uk, 2020)
Similarly, the return on equity (ROE) figure has also increased from - 6% in the year 2017 to a positive 4% in the year 2019 establishing an efficient operation in terms of profitability for the charity during the given period under review. In this context, it may be wise to note that the business is of a charity and hence no profit motive is involved in the operation. Therefore, the net profit should be considered to be a net surplus for the purpose of for the expansion and future development of the business (SINHA and SINGHVI, 2017). The equity, in this case, is considered to be a net worth or the net asset position of the business and the return is calculated with reference to a net income position of the charity for the respective years. The aforesaid data may denote a growth prospect of the operation in terms of the surplus generation capacity of the charity as far as last year's figure are concerned.
Figure 3: Return on Equity of Marie Curie for 2017 to 2019
(Source: Mariecurie.org.uk, 2020)
3.2 Liquidity Analysis
    Particulars
    2019
    2018
    2017
    Liquidity Ratios:
     
    
     
    Cash Ratio
    0.11
    0.22
    0.02
    Current Ratio
    1.39
    1.18
    0.89
Table 2: Liquidity Ratios of Marie Curie for 2017 to 2019
(Source: Mariecurie.org.uk, 2020)
The liquidity of the business may best be assessed with reference to cash ratio and current ratio (Bibi and Amjad, 2017). The cash ratio of the organisation shows that the same has increased from 2% to 11% in the last three years. Cash ratio primary denotes the proportion cash carries with respect to current liabilities primarily the creditors. The 11% cash ratio main denote that the management is having an inadequate case position to pay of current liabilities.
Figure 4: Cash Ratio of Marie Curie for 2017 to 2019
(Source: Mariecurie.org.uk, 2020)
Similarly, the current ratio accurately reflects the liquidity position of a business. Generally, 2 is considered to be ideal current ratio; however, any figure less than 2 may also be considered to be sufficient as far as liquidity position of a business is concerned and remain...