Rolls Royce The principle activities of Rolls Royce are to provide "integrated power solutions for customers in civil and defense aerospace, marine and energy markets." The breakdown is as following:

The auditor's report conveys the following findings.

"The financial statements give a true and fair view of the state of the company's affairs"

The financial statements have been properly prepared in accordance with IFRS and UK GAAP

The director's remuneration report has been properly prepared and is consistent with the financial statements

There is nothing to report under the Companies Act of 2006.

The ratios for Rolls Royce are as follows:

Ratio

Expression

Industry

Average

Eg Trade receivables period

days

days

ROE

1559/6105

736/4519

19%

Gross profit margin

2745/12161

2448/11124

22%

10%

Net profit margin

1559/12161

848/11124

3%

Current ratio

8522/7194

8108/6916

Inventory turnover period

2726/9416 x365

2561/8841 x 365

105 days

105 days

50 days

Payables' turnover period

9581/6387 x 365

8841/6236 x 365

243 days

259 days

20 days

Gearing ratio

4816/11278

4988/9880

Rolls Royce has grown in the past year. The company's sales have increased 9.3% from £11,124 to £12,161. The company's operating profit has also increased, from £1186 to £1373, which is a gain of 15.8%. The stock price has increased from 757 to 873, which is a gain of 15.3%.
5.

The company has experienced a fairly normal growth trajectory over the 2011-2012 period. The figures used are exclusive of restructurig that the company undertook, which allows the figure to be more comparable with each other. The gains in the operating profit and share price are almost identical.

On the whole, the company's operating metrics are positive. Rolls Royce has healthy margins and a strong balance sheet. Most of its metrics outperform the industry average. The cash conversion cycle is very long for Rolls Royce -- the fictional industry figures make it look bad but really RR probably performs in line with its peers. The long lead times and high development costs in this industry highlight the need for an extended cash conversion cycle. The payables period is especially interesting -- RR seems to want to receive payment for a good before paying its own bills. Normally, that would be considered a sign of financial distress, but with an otherwise healthy balance sheet it seems this is more the industry norm.

The P/E ratio is interesting. The stock price has increased 15.3%,…