Financial Analysis Assignment Sample

Financial Analysis

Introduction - Financial Analysis

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Safestore Holdings is a public limited company and is a real estate organization in the UK. Besides that, the organizations and subsidiaries of the Safestore have provided self-storage facilities for the customers. The approach of this engagement has been evaluated with the corresponding analytical developments on the real estate business in the UK. The organization also provides facilities in Paris. The chairman of Safestore Holdings stated that the business models of Safestore Holdings had been demonstrated on resilience and quality. The first priority of the organization is to maximize the returns of the economics of existing stores of Safestore. Apart from this, the structure of the analysis has been developed with the corresponding aspects such as development criterion for better evaluation and management with a significant strategic process. On the other hand, the organization has developed a 732000 sq feet pipeline of MLA, which indicates a significant opportunity in business progress for future growth (safestore.co.uk, 2022).

The group of Safestore Holding has had “seventeen stores in the last five years, and all the stores are performing better”. Apart from this, the organization has a joint venture with the CERF that has used the accounting of equity method that represented 20% of investments on Safestpore Holding Plc.

Aim

The aim of the report is to find an analysis of the financial key performance of Safestore and evaluate better financial strategy in the upcoming challenges.

Company profile

The Chief executive officer of Safestore has stated 2021 was a record-breaking year for Safestore, and it has 34.1% of occupancy on EPS for growth in self-funded for Safestore Holdings Plc. Apart from this, the final dividend of Safestore in 2021 was 38.6% (Atrill and McLaney, 2006). The organization Safestore is the largest safe storage group in the UK, and it has 145 stores in the UK and Europe. Apart from this, the structure for the according to aspect with corresponding announcements that develops the 118 stores in the UK are fully owned by Safestore and 45 in London. Besides that, the structure for the engagement has been developed from 1998 with a different communicative structure for better development analysis. The current market price of Safestore is 1,343.26 million euro, and 606 euro is the current year's market average price (Leiwy and Perks, 2013). 

Description

The number of employees of the Safestore is around 550 in France and the UK (safestore.co.uk, 2022). The targeted area of Safestores is in London, France, the southeast and the rest of England, Paris, Wales, and Scotland. This organization has a core business portfolio such as business storage, personal storage, and student storage. The analysis and actual development have been identified with the corresponding access for better development on these structural aspects and processes for better evaluation and management. Safe stores occupy about 30% of stores in the UK from 31 October 2018 for 12.5 years (Collier, 2015).

Activities

The competitors of Safestores were developed with the creation, and the name of these competitors is Big Yellow group, Access safe storage, Storage king, and Shurgard safe storage UK. These are the main competitor's companies in the UK for development and structural improvements in the business analysis and development in the improved structure. The Bing Yellow group is the safe store provided solution in the UK that has about 75 stores in the UK (safestore.co.uk, 2022). The chairman of Yellow Group stated that expansion is the main aim and principal objective of Yellow Group. Apart from this, safe access storage has 57 stores across the UK, whereas the Safestore has 120 stores in the UK.

The key Ratio of the last three years

Liquidity

Current Ratio

Current Ratio of 3 years	2019	2020	2021
Current Assets (Million £)	72.661	56.354	101.1
Current Liabilities (Million £)	68.646	77.342	121.2
Current Ratio assets/ current liabilities)*100%	> 105.85%	> 72.86%	> 83.42%

 Table 1: Current Ratio of Safestore Holdings plc

“The formula of the current Ratio is current assets divided by current liabilities”. Therefore, the current asset of Safestore holdings plc in 2021 is £101.1 million. Besides that, the current liabilities in 2021 are £121.2 million (safestore.co.uk, 2022). Therefore, the approach of the analytical aspects is being conducted for the engagement of the analysis of the current Ratio. Therefore the current Ratio of Safestore holdings plc in 20212 is 83.42% (safestore.co.uk, 2022). 

Quick Ratio

Formula of Quick Ratio (cash and ST investments + account receivable) The quick ratio for 2021> >
Quick Ratio	2019	2020	2021
cash and ST investment (Million £)	43.001	25.392	59.119
Account receivable (Million £)	15.413	15.395	18.457
Current liabilities (Million £)	68.646	77.342	121.2
Quick Ratio	85.09%	52.74%	64.1%

Table 2: Quick Ratio of Safestore Holdings plc

The above table represents the Quick Ratio of Safestore holdings. The formula of the quick Ratio and ST investments + account receivable) Quick Ratio.

Therefore, the cash and ST investments in 2021 for Safestore million, and account receivable million. Whereas current liabilities in 2021 is £121.2 million

Therefore, the quick ratio>>>>

The quick Ratio is higher in 2019 and lowers in 2020 with the comparison of the last three years' financial data. 

Profitability

Gross profit margin

Gross profit margin
Fiscal Year	Gross profit	Revenue	profit/Revenue)*100%

2021

177.8

256.6

69.29%

2020

137.3

210.3

65.29%

2019

126.9

196.6

>

Table 3: Gross profit margin Ratio of Safestore Holdings plc

Above table 3 shows the gross profit margin of Safestore holdings plc. The formula of gross profit margin profit / Revenue) * 100% [Refer to appendix 1]

Therefore, the gross profit in 2021 is £177.8 million, and revenue is £256.6 million

The gross profit margin in 2021 for Safestore holdings>>>

Whereas, in 2020, the gross profit margin>

This indicates the gross profit will increase in 2021 rather than 2020. On the other hand, in 2019, the gross profit was 64.55%. The gross profit margin is increased each year.

Return of asset

Return Of Asset
Fiscal Year	Net income (Million £)	Average asset (Million £)	Return of income / average asset)* 100%
2021	522.8	2613	20.01%

2020

230.6

2055

>

2019

171.1

1804

>

Table 4: Return of Asset Ratio of Safestore Holdings plc

The above table shows the return assets ratio of Safestore holdings plc. The net income of safestore holdings in 2019 is £171.1 million, and the average asset million. 

Therefore, the formula of return of asset ratio income / average asset)* 100%

>>

Whereas in 2020, the return of asset ratio is 11.22%, and in 2021, the Ratio is 20.01%

The returns in net assets have increased near about 10% in three years. This shows the improvements of the business of Safestore holding plc. 

Activity

Inventory turnover ratio

Formula of Inventory turnover Ratio (the cost of goods sold in a year / the average inventory) *100 Therefore, inventory turnover ratio in> %
Inventory turnover Ratio	2019	2020	2021
Cost of goods sold (Million £)	69.682	72.932	77.867
Average Inventory (Million £)	323.801	388.651	547.398
inventory turnover Ratio	21.52000766	18.76542193	14.22493323

Table 5: Inventory Turnover Ratio of Safestore Holdings plc

The above table represents the inventory turnover ratio of three years. The inventory turnover ratio is developed with “the cost of goods sold in a year and the average inventory” used in this year. In 2020, the total cost of goods sold by Safestore holdings was £72.932 million, and the average inventory used in 2020 was £388.651 million (Safestore Annual report, 2020). The corresponding development of the corresponding analysis has been developed with the analytical approach for the investment through the formula of inventory turnover ratio.

Therefore, inventory turnover ratio in> %

The Ratio in 2021 was 142.2493. This indicates that inventory turnover has decreased over the years.

Leverage

Debt to asset ratio

Formula of Debt to asset ratio (Total debt Million / Total asset Million) )* 100% Therefore, debt to asset ratio in 2019 100% %
Debt to Asset ratio	2019	2020	2021
Total debt (Million £)	617.9	690.6	776.2
Total asset (Million £)	1905	2204	2898
Ratio	32.44%	31.33%	26.78%

Table 6: Debt to asset Ratio of Safestore Holdings plc

Above table 6 represents the debt to asset ratio. This Ratio helps to understand the debt over asset margin in a financial year. In 2019, the total debt of Safestore holding plc was £617.9 million, whereas the total assets were £1905 million.

Therefore, debt to asset ratio in 2019 100%

%

In comparison to 2020 and 2021 the ratio and 26.78% respectively.

Debt to equity ratio

Formula of Debt to equity (total liability/ total equity)*100% Debt to equity ratio in 2019 1147)*100% >
Debt to equity	2019	2020	2021
Total Liability (Million £)	757.8	862.2	1016
Equity (Million £)	1147	1342	1882
Ratio	66.07%	64.25%	53.99%

Table 7: Debt to Equity Ratio of Safestore Holdings plc

The above table shows the debt to equity ratio in the last three financial years, 2019, 2020 and 2021.

The approach of “debt to equity ratio” is developed with total liability and total equity in a financial year. Improvements of the corresponding development have been evaluated within the structural process and formula of the debt to equity ratio.

Debt to equity ratio in 2019 liability/ total equity)*100%

1147)*100%>

 Trend in accounts of last three years

Income statements

FISCAL
Income statements	2019 (£M)	2020 (£) M	2021 (£M)
Sales/Revenue	1,51,800.00	1,62,300.00	1,86,800.00
Revenue	1,51,800.00	1,62,300.00	1,86,800.00
Sales Growth	5.49%	6.92%	15.10%
Total Expense	92,700.00	76,000.00	85,600.00
Total Interest and Expense	13,500.00	15,000.00	15,300.00
Selling, General Expenses	17,900.00	20,100.00	32,100.00
Depreciation & Amortization Expense	6,100.00	900	1,000.00
Depreciation	6,100.00	900	1,000.00
Other Operating Expense	2,100.00	-400	-3,400.00
Operating Income	59,100.00	86,300.00	1,01,200.00
Operating Income Growth	2.07%	46.02%	17.27%
Operating Income Margin	-	-	54.18%
Non-Operating Income (Expense)	-200	300	-500
Non-Operating Interest Income	100	100	100
Miscellaneous Non Operating Expense	-300	200	-600
				Unusual Expense	-88,400.00	-1,26,300.00	-3,19,200.00
Pretax Income	1,47,300.00	1,97,900.00	4,04,600.00
Pretax Income Growth	-20.51%	34.35%	104.45%
Pretax Margin	-	-	216.60%
Income Taxes	15,200.00	19,900.00	22,600.00
Income Tax - Current - Domestic	-	2,800.00	5,500.00
Income Tax - Current - Foreign	5,100.00	-	-
Income Tax - Deferred - Domestic	10,100.00	17,100.00	17,100.00
Consolidated Net Income	1,32,100.00	1,78,000.00	3,82,000.00
Net Income	1,32,100.00	1,78,000.00	3,82,000.00
Net Income Growth	-25.45%	34.75%	114.61%
Net Margin	-	-	204.50%
Net Income After Extraordinary	1,32,100.00	1,78,000.00	3,82,000.00

Table 9: Income statements of Safestore Holdings plc

The above table developed the income statements of three years of safe store holdings plc. In 2019 net income of the organizations is £132100, whereas the net income of this organization in FY 2020 and 2021 is £178000 and £382000, respectively (Safestore Annual report, 2021). This indicates the improvements of the organization in recent years compared to the past years.

Balance sheet

Asset	2019 ( £M)	2020 ( £)M	2021 ( £M)
Short Term Investments	33	20	43
Cash Only	33	20	43
“Short Term Investments Growth”	216.19%	-40.96%	120.41%
“Short-Term Receivables”	16	17	24
“Short Term Receivables Growth”	-2.96%	3.66%	38.82%
Investments Total	1,409	1,649	2,034
Investment Property	1,409	1,648	2,031
Other Investments	-	1	2
“Investment in Unconsolidated Subs”.	3	5	7
“Net Property, Plant & Equipment”	2	3	3
Other Assets (Including Intangibles)	7	7	6
Total Assets	1,471	1,701	2,117

Table 10: Total asset of safestore holding Plc

The above table represents the asset analysis of Safestore holding plc. The total asset of this organization was £1471M in 2019 (Safestore.co.uk, 2019). The total asset in 2021 is £2117M. This indicates the development of the organization in two years.

Liabilities	2019 ( £M)	2019 ( £M)	2021 ( £M)
Total Debt	477	532	567
“ST Debt & Current Portion LT Debt”	10	12	12
“Current Portion of Long Term Debt”	10	12	12
“Long-Term Debt”	467	519	555
“LT Debt excl. Capitalized Leases”	413	455	485
“Capitalized Lease Obligations”	54	-	-
Provision for Risks & Charges	-	-	2
Total Growth of Debt	11.85%	11.58%	6.64%
Total Debt / Total Assets	32.39%	31.26%	26.78%
Deferred Taxes	64	85	96
Deferred Taxes - Credit	65	85	97
Deferred Taxes - Debit	0	0	1
Other Liabilities	44	49	76
Other Liabilities (excl. Deferred Income)	29	33	59
Deferred Income	15	16	18
Total Liabilities	585	666	742

 Table 11: Total Liabilities of Safestore holding Plc

The above table indicates the total liabilities of the organizations. Besides that, improvements and approaches of analytical development and management have been evaluated with further improvements criterion as the total liabilities are decreasing year by year. This represents that the debt of the organization is decreased.

Cash flow statements

Operating activities	2019	2020	2021
Funds from Operations	65,100.00	71,500.00	86,900.00
Funds from Operations Growth	7.43%	9.83%	21.54%
Changes in Working Capital	1,500.00	4,200.00	10,100.00
Receivables	900	-100	-5,400.00
Inventories	-	-	-200
Accounts Payable	600	4,300.00	13,600.00
Other Assets/Liabilities	-	-	2,100.00
Net Operating Cash Flow	66,600.00	75,700.00	97,000.00
Net Operating Cash Flow Growth	9.90%	13.66%	28.14%
Investing Activities
All values GBP Thousands.	2019	2020	2021
Capital Expenditures	-900	-1,300.00	-1,000.00
Capital Expenditures (Fixed Assets)	-900	-1,300.00	-1,000.00
Capital Expenditures Growth	-12.50%	-44.44%	23.08%
Net Assets from Acquisitions	-6,400.00	-14,300.00	-
Sale of Fixed Assets & Businesses	-	100	-
Purchase/Sale of Investments	-43,200.00	-62,400.00	-65,200.00
Purchase of Investments	-62,400.00	-65,200.00
Sale/Maturity of Investments	-	-	-
Other Sources	600	300	-
Net Investing Cash Flow	-49,900.00	-77,600.00	-66,200.00
Financing Activities
All values GBP Thousands.	2019	2020	2021
Cash Dividends Paid - Total	-35,000.00	-37,700.00	-42,600.00
Common Dividends	-35,000.00	-37,700.00	-42,600.00
Cash Dividend Growth	-11.82%	-7.71%	-13.00%
Change in Capital Stock	100	-	700
Sale of Common & Preferred Stock	100	-	700
Proceeds from Stock Options	100	-	700
Issuance/Reduction of Debt, Net	42,000.00	25,700.00	35,600.00
“Change in Long-Term Debt”	-5,400.00	-6,900.00	-7,500.00
“Reduction in Long-Term Debt”	-5,400.00	-6,900.00	-7,500.00
Other Funds	-600	-	-
Other Uses	-600	-	-
Other Sources	-	-	-
“Net Financing Cash Flow”	6,500.00	-12,000.00	-6,300.00
“Net Financing Cash Flow Growth”	120.00%	-284.62%	47.50%
Exchange Rate Effect	-500	300	-900
Net Change in Cash	22,700.00	-13,600.00	23,600.00
Free Cash Flow	65,700.00	74,400.00	96,000.00

Table 12: Cash Flow statements of Safestore holding Plc

The approach and the analytical analysis have been conducted with the further aspects of cash flow statements. This table includes financial activities, investing activities, and operation activities. The totally free cash flow in 2020 was £74400 M whereas, in 2021, the free cash flow was £96000M. This indicates the growth upon the year changes of the organization.

 Conclusion

The comprehensive report finds the financial development and aspects of the Safestore holding plc. Besides that, the corresponding development and aspects of this financial development and criterion have shown the different analytical development for conclusion analysis of these aspects with the further improvements and analytical approach for overall dimensions and development structure. Besides that, the impacts of the analytical approach have been identified upon the cash flow statements and balance sheet of the last few years [refer to appendix 2]. The comprehensive report concludes that the overall business development of Safestore holdings plc has a positive growth of economic status. Besides that, the impacts on the organization have to be developed with the corresponding analytical aspects with their comparative organizations.

Reference list

Atrill, P. and McLaney, E.J., 2006. Accounting and Finance for Non-specialists. Pearson Education.

Collier, P.M., 2015. Accounting for managers: Interpreting accounting information for decision making. John Wiley & Sons.

Engert, W., Fung, B. and Segendorff, B., 2019. A tale of two countries: Cash demand in Canada and Sweden (No. 376). SverigesRiksbank Working Paper Series.

Leiwy, D. and Perks, R., 2013. EBOOK: Accounting: Understanding and Practice. McGraw Hill.

McLaney, E. and Atrill, P., 2016. Accounting and finance: an introduction. Prentice Hill.

Müller, C., 2020. The demand for safe liquid assets and the implications of issuing a Central Bank Digital Currency for bank funding instruments (No. 8/2020). Staff Memo.

Safestore annual report, 2019. Safestore Holdings plc.Annual report and financial statements 2019 [Online] Accessed from: https://www.safestore.co.uk/CMSPages/GetFile.aspx?guid=de31b8d4-dc8a-4a1a-ad9a-dbe1cb120adc [Access on:14/03/2022]

Safestore annual report, 2020. Safestore Holdings plc.Safestore Holdings plc Annual report and financial statements 2020 [Online] Accessed from: https://www.safestore.co.uk/CMSPages/GetFile.aspx?guid=8a0a6261-7ebe-49ba-ae2b-0f362ceefd77 [Access on:14/03/2022]

Safestore annual report, 2021. Safestore Holdings plc.Safestore Holdings plc Annual report and financial statements 2021 [Online] Accessed from: https://www.safestore.co.uk/CMSPages/GetFile.aspx?guid=93aa471d-1f10-4be1-a80a-c12308961ca8 [Access on: 14/03/2022]

Safestore, 2022. Investors [Online] Access from: https://www.safestore.co.uk/corporate/investors/overview.aspx [Access on:14/03/2022]

References

Dyson, J.O.H.N.R. and Franklin, E., 2010. Accounting.

Engert, W., Fung, B. and Segendorff, B., 2019. A tale of two countries: Cash demand in Canada and Sweden (No. 376). SverigesRiksbank Working Paper Series.

Holmes, G., Sugden, A. and Gee, P., 2005. Interpreting company reports and accounts.Pearson Education.

markets.ft, 2022.Equities Safestore Holdings PLC[Online] Accessed from: https://markets.ft.com/data/equities/tearsheet/financials?s=SAFE:LSE [Accessed on: 14/03/2022]

Müller, C., 2020. The demand for safe liquid assets and the implications of issuing a Central Bank Digital Currency for bank funding instruments (No. 8/2020). Staff Memo.

Reid, W. and Myddelton, D.R., 2020. The meaning of company accounts. Routledge.