Despite the negative impacts on the economy of COVID-19, investors in Hotel Chocolat Plc remain committed to the company. Hotel Chocolat have enjoyed increased revenue but a slight reduction in profits. However, at a recent meeting, shareholders insisted that the company could do better in terms of its performance. Shareholders demanded that the Board of Directors appoint a recent, high quality Financial Analyst to assess the performance of the company and make management recommendations.
With the agreement of the Board, the Chairmen of Hotel Chocolat, Andrew Gerrie, has appointed you – a Financial Analysts – to the task of appraising the company and providing recommendations on how the performance can be enhanced.
Your task has been split into 5 mini-tasks as follows:
As a Financial Analyst and using the Annual Report and Accounts of Hotel Chocolat for the period 2019, 2020 and 2021, you are required to evaluate the performance of the company across all categories of ratios. The report and annual accounts for these years are available at the following link:
You are required to calculate 2 ratios from each category of ratios and show clearly how you have calculated the ratio.
Based on your calculations, you are now required to comment on the performance of the company by summarising the findings of the ratios you have calculated in Task 1 above. You should summarise your findings and make particular reference to the interests of the different stakeholders of the company.
Note: Any accounting ratios must be calculated (and workings shown) and not extracted from external databases.
As a Financial Analyst and considering your response above, you are required to provide advice on what you think should be done in order to improve the performance of each category of ratios.
Now consider yourself as a Financial Analyst analysing the Operational Review on page 18 of the latest annual report. The Operational Review mentions 6 statements of what the company is doing or has done.
You are required to comment on which ratios each of these statements would impact. For example, the first statement talks about an increase in investment in people and technology. Which ratio would this impact and how?
Now consider page 24, Risk and Potential Impact. There are 5 potential risks that are mentioned. You are required to comment on one ratio that each of these potential risks may impact and why?