(a) Analyse the financial performance and position of Inter-Continental Hotels Group plc for the year ended 31st December 2013 compared to the previous year.
(b) “The conceptual framework states that qualitative characteristics are the attributes that make financial information useful to users. The two fundamental qualitative characteristics are relevance and faithful representation.”
Explain briefly the fundamental qualitative characteristic of relevance and discuss, with reference to Inter-Continental Hotels Group plc, how providing information on exceptional items enhances the relevance of financial statements.
Additional assignment guidance notes
Ratios that should be calculated
ROCE – return on capital employed
Operating profit margin (including and excluding exceptional items)
Net profit (before or after tax) including and excluding exceptional items
Basic and Diluted EPS (these are shown on the income statement and will not need to be calculated)
Asset turnover
Current ratio
Acid test ratio
Receivables collection period
Payables payment period
Gearing
Interest cover
Price/earnings ratio
Dividend cover
Change in share price over the relevant period
(a) Ratios shown for 2 accounting periods for Inter-Continental Hotels Groups plc in a user friendly format (showing all your workings in an appendix). You will need to calculate profitability ratios (including and excluding exceptional items, where relevant), liquidity ratios, efficiency ratios, and the gearing ratio and investment ratios.
(25 marks)
Analysis of the financial performance and position (encompassing profitability, liquidity, efficiency, gearing and investment) of Inter-Continental Hotels Group plc for the year ended in 2013 compared to the previous year. Your discussion should include an introduction to the group, an analysis of the segmental information provided in the annual report and an explanation of the impact of the exceptional items on financial performance. (45 marks)
(b)
Brief explanation of the fundamental qualitative characteristics of relevance (from the conceptual framework for financial reporting issued by the IASB in September 2010 (6 marks)
Discussion (with reference to Inter-Continental Hotel Group plc) on items within the ordinary course of business which are of such size, nature or incidence that they require separate disclosure in the financial statements in order for the financial statements to be relevant to users. (IAS 1)
(14 marks)
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