Plimsoll Portfolio Analysis Example Report

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Business Name and Information The full business name and address is provided for each company, as well as telephone number, fax number and website. Directors names and ages are provided as well as the shareholders.

Latest accounts Presented in a clear and easy to read format, each company is analysed on the basis of their latest available accounts. Five years of accounts gives you an in-depth picture of the financial health of each company, so you can assess their long term prospects.

Sales Growth Is the company growing? The industry average displayed alongside the company’s performance makes it easy to see how the company is growing- or indeed contracting. Consecutive years of negative growth should be taken seriously.

Trading stability Are total sales proportionate to investments? This chart quickly alerts you to any change in the companys trading stability. Look here to see if perhaps an ambitious investment isnt being realised in extra sales. Or perhaps there has been a decline in market appeal of the companys products or services. This are is key when researching potential acquisitions.

Profitability Are profits being maintained? Competitive pricing and increased costs show their impact in this area. Companies with a falling line in this area might want to reduce debt levels in order to instantly improve the financial health of the company.

Working capital Is the company able to pay off its debts? This chart measures the ability of a company to carry out every day business transactions without resorting to selling fixed assets. Plimsoll consider that if a company is failing, whether the debt is short or long term is irrelevant. Rather it is the total amount of debt which matters, and if high, hampers the companys ability to do business.

Gearing How much of the company is ‘owned’ by the shareholders? A low level or decreasing line indicates a company is highly geared, meaning a high proportion of debt and therefore higher risk. As borrowings increase, companies experience a drop in equity which is reflected in the gearing chart.

Immediate Liquidity How much cover is available for trade creditors? This chart shows the cover available for creditors, many of whom are unsecured unlike the banks. Trade creditors may be anxious to get sales but failure to have adequate information on the financial health of a customer may cost them dear in the long term.

The Plimsoll Chart What is the financial health of the company? The Plimsoll chart is the culmination of the six preceding charts and is an instant health check of the company. A low or falling line here indicates the weakening financial strength of the company and should be taken seriously. Recent research showed that 84% of companies with a Plimsoll line below the Y axis failed within 2 years.