Company A - Domino’s Company B - Greggs

Corporate Finance
By F113847

Company A - Domino’s Pizza Group Plc

Company B - Greggs Plc

Word Count - 2992

Company A - Domino’s Company B - Greggs

Table of Contents
Introduction ..................................................................................................................... 3
CEO Compensation Comparison ........................................................................................ 3
CEO compensation and potential problems to firms .......................................................... 4
Company’s Performance and CEO Compensation .............................................................. 5
Corporate Governance and CEO Compensation ................................................................. 6
Financial Performance of the companies ........................................................................... 8
Beta and cost of equity ..................................................................................................... 8
Cost of Equity ................................................................................................................... 9
Difference b/w Beta and standard deviation ................................................................... 10
Systematic and Unsystematic risk ........................................................................................... 11
Beta and CEO compensation ........................................................................................... 11
Capital Structure ............................................................................................................ 12
M and M theory ..................................................................................................................... 12
NOI THEORY .......................................................................................................................... 13
Calculating WACC ........................................................................................................................................ 13
Calculating Market value ............................................................................................................................ 14

Financial Concerns .......................................................................................................... 15

Company A ............................................................................................................................ 15
Company B ............................................................................................................................ 16
Conclusion ...................................................................................................................... 17
References...................................................................................................................... 18
Appendices ..................................................................................................................... 21
Company A - Domino’s Company B - Greggs

Introduction
Corporate finance is the branch of finance that deals with how corporations handle funding
sources, capital structuring, accounting, and investment decisions.

Company A & B are both fast food restaurants in the United Kingdom. Despite the fact that
their operations are similar, their financial structure and finance strategies are significantly
different. In this study, we will compare the financial management of both of these
organisations in detail.

CEO Compensation Comparison

When we look at the total compensation paid to CEOs by Company A and Company
B we can see that the salary component is lower in both cases, but the total
compensation is comparable to what similar sized companies pay to their CEO’s
(Simply Wall St, n.d.) (See Appendix 1).

Dominoes

Greggs
Annual Bonus
LTIP (over 3 years)
Award
Performance
Annual Bonus
share plan
Profit before taxes
EPS growth (70%)
(70%)
Startegic EPS growth
Profit (50%) Sales (20%) Objectives (30%) (50%)

order count (10%) Relative TSR (30%)

Cost savings
(10%)
ROCE (50%)

Strategic plan
(10%)
Food Waste
targets (10%)

People (5%)
Sustainability
(10%)

Digital and IT (5%)

Figure 1 Figure 2

Both Company A and Company B have a similar performance compensation system,

as both companies offer annual and long-term bonuses (LTIP & PSP) based on
distinct performance metrics, as shown in Figure 1&2 . The annual bonuses
Company A - Domino’s Company B - Greggs
incentivise annual delivery of financial and operational goals linked to the company’s
strategy whereas the long term incentives provides long-term retention, alignment
with company goals and sustained growth. (Dominoes group plc, 2022). The annual
bonus at Company A could be up to 200 percent of the base income, but the bonus
at Company B could be up to 125 percent of the base salary. In terms of long-term
incentives, the CEO of Company A can earn up to 200 percent of his base income,
whereas the CEO of Company B can earn up to 125 percent of his base salary
(Dominoes group plc, 2022).Clearly Company A is giving more performance based
incentives than Company B but Company B performance metrics are more diverse.

CEO compensation and potential problems to firms

Figure 3 Figure 4

Paul, who joined Company A in May after previously working for Costa Coffee, is paid
a base salary of £750,000, which is more than 40% greater than that of retiring boss
David Wild (Figure 3). (See Appendix 1) According to ISS, the costs were
'extraordinarily high' for a FTSE 250 company. Shareholders may be sceptical of
significant fixed pay increases because the salary "may serve as a crutch when
performance falls short of expectations." (Figure 4) (Dennys, 2021)The policy allows
for an annual bonus of up to 150 percent of the basic salary, but the CEO has been
awarded 200 percent in extraordinary situations, which may cause shareholders to be
concerned. (Dominoes group plc, 2022)

In the case of Company B, the CEO's base salary is aligned with performance and has
not seen a sudden increase in the base salary. The base pay for performance is also
linked to the company's earnings. In the year 2019, for example, the CEO did not earn
any performance-related pay because the company did not meet the targets outlined
in the remuneration policy. Also, the total remuneration is reasonable when compared
to what other similar-sized companies pay their CEOs. (Simply Wall St, 2019)
Company A - Domino’s Company B - Greggs

Company’s Performance and CEO Compensation

Company B

Figure 5 Figure 6

As shown in Figure 5&6, There has been no abrupt escalations in CEO’s base salary
and the compensation is consistent with the company's performance. For example,
In 2020, overall sales fell by 30.5 percent, with a -2.4 percent reduction in revenue,
resulting in a pre-tax loss of $13.7 million and a diluted loss per share of 12.9p which
has drastically affected the total renumeration of the CEO. As ROCE and EPS have
consistently increased over the last three years, the CEO received larger long-term
incentives in 2019. In 2021, the company met its financial and strategic goals,
resulting in an increase in the CEO's annual bonus. (See Appendix 1)

Company A

Figure 7 Figure 8
Company A - Domino’s Company B - Greggs

Figure 9

CEO compensation at Company A is justified and clearly linked to the company's

performance. Since the company did not meet its PBT targets in 2018 and 2019, the
CEO did not get an annual bonus.(Fig. 7&8). As EPS did not grow in the same
years, the LTIP was severely decreased(Fig. 7&9). There was no LTIP vesting in
2020 or 2021 because a new executive was appointed by Company A in 2020, he
will begin collecting LTIP in 2023, as it is granted on a three-year basis . Also worth
noting is the increase in the CEO's base compensation for the year 2021. I believe
the raise is unreasonable because the company is still recovering and there is no
compelling justification to do so. (Dennys, 2021)

Corporate Governance and CEO Compensation

The CEO's compensation is based on his duties, and the bonus is determined by
whether or not he meets the committee's target. It also relies on the size of the
company and the number of directors on the board. (Greggs plc, 2021)

In the case of Company A, increasing collection was a key component of the

strategy, and the company was able to achieve an 87 percent increase in collection
with 422 outlets offering in-car collections. The firm established 31 new stores, one
more than they had planned, with all of them featuring innovative retail concepts.
The addition of 60% cages and dollies improves the efficiency of the supply chain.
Product diversification has also been a priority for the corporation (Dominoes group
plc, 2021)The CEO remuneration has been boosted by 40%, making it currently
higher than the median CEO salary in the FTSE 250 for similar sized companies.
The corporation is currently in a recovery phase as a result of its financial challenges
over the last five years. If the financial situation of the company worsens, a pay raise
may be a source of concern for investors and shareholders.

Company B has advanced its multi-channel development strategy, rolled out Click +
Collect across the entire estate, and made delivery available in over 600 stores.
Company B revived its Shop opening pipeline, expressing confidence in the
company's long-term growth prospects. During Covid-19, shop and supply chain
Company A - Domino’s Company B - Greggs
activities were modified to protect team members and customers. Company B
developed Resilience through the breadth of its store estate and customer base. It
also invested in supply chain and systems to modernise fundamental business
processes and information technology platforms .(Greggs plc, 2021). As the
company exceeded its strategic objectives, the CEO's annual remuneration
increased proportionately. Though, the company's share price has become
increasingly volatile in recent years, which could be due to the fact that there is no
clear compensation reward for risk management at Company B. (Tariq, 2010)
Company A - Domino’s Company B - Greggs

Financial Performance of the companies

Table 1

5Y Average Return
Year Greggs Dominoes
2017 -1.50% -1.50%
2018 -3.00% 4.10%
2019 1.60% -3.40%
2020 -1.60% -0.20%
2021 -0.90% 0.90%
Average -1.10% -0.01%
SD 0.11 0.09
Table 1. suggests that, Company A reveals out to be a better investment option with
higher profits and reduced risk. Company A and B both had negative returns over
the last five years, with Company B averaging -1.1 percent and Company A
averaging -0.0062 percent. Company A has a lower standard deviation, implying less
volatility in its share price over the last five years. This means that Company A
traded in a narrower trading range than Company B, providing investors with more
consistent results.

Beta and cost of equity

Beta takes into account the riskiness of an investment relative to the market. (Hillier
et al., 2021)

Beta = Variance/Covariance
Where,

Covariance=Measure of a stock’s return relativeto that of the market

Variance=Measure of how the market moves relative to its mean

βi < 1: Asset is less volatile (relative to the market)

βi = 1: Asset volatility is the same rate as the market
βi > 1: Asset is more volatile (relative to the market)
Company A - Domino’s Company B - Greggs
Table 2 (See Appendix 5)

Greggs Dominoes
Beta (5Y) 1.18 0.8

As shown in Table 2, The beta for Company B is 1.18, and the beta for Company A
is.80. The Company B beta is greater than one, indicating that it is more volatile than
the market, whereas the Company A beta is less than one, indicating that it is less
volatile than the market. Company B is the riskier investment because higher beta
means greater volatility. As beta rises, so does the cost of equity, as the corporation
must now pay more to investors to compensate for the risk. (Hillier et al., 2021)
So, in this situation, Company B cost of equity would be higher than Company A

Cost of Equity
Cost of Equity is the rate of return a company pays out to equity investors. The cost
of equity can be calculated by using the CAPM (Capital Asset Pricing Model). (Hillier
et al., 2021)

CAPM Formula for asset I,

E(Ri) = Rf + βi * [E(Rm) – Rf]
Where,
E(Ri) = Expected return on asset i
Rf = Risk-free rate of return
βi = Beta of asset i
E(Rm) = Expected market return

Table 3 (see appendix 3)

Cost of Equity
Years 2021 2020 2019 2018 2017
Greggs 7.20% 9.57% 1.68% 0.40% 2.60%
Dominoes 6.92% 6.40% 7.06% 5.74% 5.78%
Company A - Domino’s Company B - Greggs

Cost of equity comparison

12.00%

10.00%

8.00%

6.00%

4.00%

2.00%

0.00%
2021 2020 2019 2018 2017

Greggs Dominoes

Figure 10

Figure 10 illustrates that, Both corporations have seen their stock costs rise in recent
years. This could be owing to the recent negative average stock return caused by
the covid 19 epidemic, which has directly impacted the beta. If we look at the
average COE over the last five years, we can see that Company B has a COE of 4.2
and Company A has a COE of 6.3 (Table 3), despite the fact that Company A has a
lower beta than Company B. This could be due to the variation in capital structures
between the two companies. Company A has a debt-based financing structure,
which indicates that there is more risk involved. (Hillier et al., 2021)

Difference b/w Beta and standard deviation

Beta and standard deviation are two of the most commonly used metrics of fund
volatility. Beta measures a stock's volatility relative to the market as a whole,
whereas standard deviation measures the risk of individual stocks. (Brealey et al.,
2020)

Standard deviation is a precise measure of risk that represents the degree of

uncertainty or dispersion of cash flow. Beta evaluates an individual asset's risk
(volatility) in comparison to the market portfolio.

A beta greater than 1 means greater volatility than the overall market whereas the
beta below 1 accounts for lesser volatility. Higher standard deviations are generally
associated with more risk.
Company A - Domino’s Company B - Greggs

Systematic and Unsystematic risk

Unsystematic risk is related to the company in which funds are invested and it can
be reduced by spreading investments across industries or firms. Systematic risk is
related to the entire market and cannot be diversified.

Standard deviation measures the total risk, which is both systematic and
unsystematic risk whereas Beta measures only systematic risk (market risk).
(Brealey et al., 2020)

Beta and CEO compensation

Company A' five-year beta is .8, whereas Company B five-year beta is 1.18.
Company A' beta has remained stable, however Company B’ beta has lately risen in
2020. This could be attributed to the company's bad performance in 2020. The same
is mirrored in Company B’ CEO performance-related pay, which is $0 for the year.

The insight that we gain is that CEO pay is directly proportional to the firm's
performance. It is critical for a company's performance to be at its optimum in order
to increase shareholder satisfaction. To increase shareholder satisfaction, the CEO
must practise risk management in order to guarantee a steady return to
shareholders. (Dominoes group plc, 2021).The role of beta and its management
becomes critical in this situation.

High-beta stocks are supposed to be riskier but provide higher return potential; low-
beta stocks pose less risk but also lower returns. To perform optimally, the CEO has
to pick a right balance to promote growth and development of the firm. (Brealey et
al., 2020)
Company A - Domino’s Company B - Greggs

Capital Structure
The proportion of debt and equity used to finance a company's assets is referred to
as its capital structure. The firm's value can be written as V=D+E, where V
represents the firm's value and D and E represent the market values of the firm's
debt and equity, respectively.

An optimal capital structure is one in which the proportion of debt versus equity
financing maximises V. (Ross, Westerfield and Jordan, 2020)

M and M theory

M&M theory states that -

• In the absence of taxes, firm capital structure is irrelevant.

• With taxes, a firm's cost of capital can be lowered through issuing debt. This
highlights the importance of debt as a tax shield. (Ross, Westerfield and
Jordan, 2020)

Using m&m theory, we will compare the firms value by calculating last 5 year debt
to equity outcomes.

Table 4 (see Appendix 3)

Debt-Equity Ratio
2017 2018 2019 2020 2021
Greggs 0.47 0.48 1.3 1.2 1.06
Dominoes 7.2 141.4 -13 -68 -10

(See Appendix)

According to M&M (Modigliani-Miller) theory, the low debt-to-equity ratio

demonstrates that the corporation has an equity-based capital structure. The high
debt-to-equity ratio demonstrates that the corporation uses a debt-based capital
structure. Company A used a debt-based capital structure in this case, but Company
B has continuously used an equity-based capital structure over the years(Table 4).
Despite the fact that high debt-to-equity ratios are frequently associated with
increased risk owing to debt financing, m&m theory claims that the escalating debt-
to-equity outcome reflects efficiency in a management leader's escalating
operational leverage. (Edmonds et al. 2021). From 2019 to 2021, Company A debt to
Company A - Domino’s Company B - Greggs
equity went negative. This happens when a company's debt interest rates are higher
than its return on investment. (Fernando, 2021)

NOI THEORY

Table 5

Net Operating Profit (m GBP)

2017 2018 2019 2020 2021
Greggs 72 82 114 -7 153
Dominoes 75.5 89.4 81.4 106.4 115.1

According to the net operating income concept, the value of a firm is determined by
operating income and the associated business risk. Changes in debt components
will have no effect on the firm's value. It is assumed that the benefit gained by a
corporation from debt infusion is offset by an increase in the required rate of return
by equity shareholders. (Ross, Westerfield and Jordan, 2020)

V = EBIT/WACC

Calculating WACC

A firm’s Weighted Average Cost of Capital (WACC) represents its blended cost of
capital across all sources, including common shares, preferred shares, and
debt. The cost of each type of capital is weighted by its percentage of total capital
and they are added together. (Hargrave, 2021)

WACC = Cost of Equity * %Equity + Cost of Debt * %Debt * (1-Tax Rate)+ Cost
of Preferred Stock * %Preferred Stock

Table 6 (see appendix 3)

Company A - Domino’s Company B - Greggs

Using graphical representation for Table 6, we can observe that both firms' WACC
has increased in recent years, with Company A’ WACC reaching 7.53 percent in
2020 and 6.69 percent in 2021, and Company B’ WACC reaching 8.5 percent and
6.7 percent, respectively, in 2020 and 2021. The rising WACC is directly proportional
to the rising risk associated with the shares because the company is paying more for
the capital that investors have put into the company.

Calculating Market value

Table 7

Market Value (V) (EBIT/WACC)

2017 2018 2019 2020 2021
Greggs 2769.23077 20500 6666.66667 -82.352941 2283.58209
Dominoes 3813.13131 6208.33333 3932.36715 1413.01461 1720.47833

From the above tables 5,6&7, we can infer that the market value is directly
proportional to the operating profit but is inversely proportional to the the WACC.
This is because according to the NOI theory, higher debt induces higher risk which
negatively impacts the company’s valuation. According to NOI theory, Company B
peak valuation was in 2019, while Company A highest valuation was in 2018. It's
worth noting that Company B met all of its PSP targets in the same year, resulting in
significant ROCE and EPS growth.
Company A - Domino’s Company B - Greggs

Financial Concerns
The financial health of the companies could be measured by calculating Z score. The
Z-score is a heuristic calculation used to predict the likelihood of a company going
bankrupt. Working capital, retained earnings, and EBIT are all calculated in relation
to a company's total assets. A Z-score of 3.0 or higher indicates strong financial
health, whereas a score of less than 1.8 indicates a significant danger of bankruptcy.
(Hayes, 2019)

Z score and subscores

Zeta (ζ) is the Altman’s Z-score
ζ = 1.2A + 1.4B + 3.3C + 0.6D + 1.0E
A is the Working Capital/Total Assets ratio
B is the Retained Earnings/Total Assets ratio
C is the Earnings Before Interest and Tax/Total Assets ratio
D is the Market Value of Equity/Total Liabilities ratio
E is the Total Sales/Total Assets ratio

Company A
Table 8 (see appendix 6)

Z score - Company A
Years 2021 2020 2019 2018 2017
Zeta (ζ) 2.21 2.01 2.66 1.8 4.73
A -0.13 -0.1 0.05 0.06 -0.02
B 0.21 0.1 0.33 0.21 2.15
C 0.21 0.22 0.23 0.18 0.22
D 0.2 0.01 -0.1 -0.01 -0.1
E 1.25 1.24 1.44 0.85 1.07

As shown in Table 8, The Company A’ Z score has changed over the years. The z
score was 4.73 in 2017, suggesting that the company was in a safe zone at the time,
but it fell sharply to 1.80 in 2018, showing that the company was in financial distress.
The dramatic change is attributed to a dip in the Subscore B, which indicates that the
company has fewer retained earnings and is sustaining its operations with borrowed
funds, raising the possibility of bankruptcy. Investors may have considered selling
the company's stock at this moment in order to protect their investments.

However, the Z score increased to 2.66 in 2019 as a result of an increase in the Sub
score E, suggesting that management has used assets efficiently to generate
revenue. Investors may have considered buying the stock as the score was closer to
3.
Company A - Domino’s Company B - Greggs

In 2020, the Z score fell to 2.01 as the Sub Score A fell to -0.1. A negative working
capital ratio suggests that the company may be unable to meet its short-term
financial obligations due to a lack of current assets. (Brealey et al., 2020)Another
point to note is that Sub Score D has been growing since 2017, showing that
investors are gaining trust in the company. Due to a rise in Sub score B and A, the
company was able to raise its Z score to 2.21 in 2021. Even if the company is near
to the 1.8 Z score, which indicates financial trouble, investors should remain
optimistic because the majority of the ratios show substantial signs of recovery.

Company B

Table 9 (see appendix 6)

Z score Company B
Years 2021 2020 2019 2018 2017
Zeta (ζ) 2.68 1.7 1.97 3.62 3.65
A 0.07 -0.06 -0.08 -0.01 -0.05
B 0.46 0.42 0.41 0.64 0.64
C 0.17 0.02 0 0.19 0.19
D 0.01 0 0 0.01 0.01
E 1.39 1.11 1.49 2.11 2.18

As shown in Table 9, For the first four years, Company B’ z score has been falling. It
was in the safe zone in 2017 and 2018, with z scores of 3.65 and 3.62, respectively,
before moving into the grey zone in 2019 with a score of 1.97, and then into financial
distress in 2020 with a z score of 1.7. Because the company is showing signs of
bankruptcy, investors may have contemplated dumping the stock at this time.
The primary cause of the dramatic change is a decrease in EBIT/total assets, which
indicates that the company was not generating enough money to remain profitable,
sustain ongoing operations, and make debt payments. Furthermore, the Total
sales/Total assets ratio has been reduced significantly. The drop could be attributed
to the ongoing pandemic at the time.

In 2021, the company has a Z score of 2.68, which is linked to sub scores C, D, and
A, indicating that the assets were used efficiently to generate enough revenue to
keep the company profitable and that the company can meet its short-term financial
obligations while still having funds available to invest and grow. Investors should
consider purchasing shares at this time.
Company A - Domino’s Company B - Greggs

Conclusion
The last five years have been challenging for both companies, as both have had
financial difficulties. Despite this, both of them have recovered from their challenges,
which could be attributed to appropriate CEO compensation packages linked to
corporate governance. The capital structures they have chosen are efficient in terms
of their financial goals, striking a balance between risk and profit maximisation.
Company A - Domino’s Company B - Greggs

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Company A - Domino’s Company B - Greggs

Appendices

Appendix 1

Values for CEO compensation and company performance

Table 10
DOMINOES
FIXED PAY (000) VARIABLE PAY (000) TOTAL (000) COMPANY PERFORMANCE
Year Base salary(000) Benefits and supplements
Pension Bonus LTIP Vesting Total Renumeration
Revenue (m) Profit before Taxes (m) Eps Eps growth
2017 510 14 51 260 548 1394 474.6 113.9 20.3 1%
2018 510 51 51 0 117 699 534.3 101.2 18.2 -10%
2019 517 14 52 0 111 694 508.3 98.8 17.6 -3%
2020 493 10 10 553 0 1081 505.1 100 17.4 -1%
2021 750 14 14 639 0 1440 560.8 96.2 16 -8%

Table 11
GREGGS PLC
FIXED PAY Variable Pay % of max potential Company Performance
PSP/optio
Pension Bonus Total Total
Taxable Annual Long Term ns (% of company
Year Base Salary Contributu (% of max Remunera compensat ROCE
benefits Incentives Incentives max Earnings
on potential) tion ion
potential)
2017 5,34,163 1,20,186 12,441 4,29,467 5,29,236 64.32% 100% 16,25,493 7,01,54,000 10,91,330 26.9%
2018 5,49,120 1,23,552 12,483 4,06,349 6,33,093 59.20% 80.19% 17,24,597 6,65,41,000 11,75,477 27.4%
2019 5,65,594 1,27,259 12,469 6,90,732 9,75,297 97.97% 100% 23,71,351 8,95,00,000 18,05,757 32.1%
2020 5,18,461 1,16,654 14,204 nil nil nil nil 6,49,319 -2,21,00,000 1,30,858 -2.4%
2021 5,75,209 1,08,139 12,644 7,16,854 5,47,022 99.70% 50% 19,59,868 12,29,00,000 13,84,659 38.2%
Company A - Domino’s Company B - Greggs
Appendix 2
Table 12
Company A - Domino’s Company B - Greggs
Table 13
Company A - Domino’s Company B - Greggs
Appendix 3

Table 14

Greggs plc Debt

2021 2020 2019 2018 2017
Long term Debt(current)
283200 291700 275700 0 0
Long term Debt (previous)
291700 275700 0 0
Average Debt 287450 283700 275700 0 0
Interest Paid 7500 7300 6800 194 nil
Interest cost rd
0.02609149 0.02573141 0.02466449 nil nil
Income before tax145600 -13700 108300 82618 nil
Income tax expense28100 -700 21300 16879 nil
Tax Rate (T) 0.19299451 0.05109489 0.1966759 0.20430173 nil
Weight of debt0.1046506
(D/D+E) 0.13896677 0.10494807 0 0
Greggs plc Equity
CAPM 2021 2020 2019 2018 2017
Risk free rate, rf 0.0149 0.011 0.021 0.02 0.022
Expected market return
0.0651 0.069 0.059 0.04 0.058
Beta 1.15 1.46 -0.11 -0.8 0.11
Cost of equity, re 0.07263 0.09568 0.01682 0.004 0.02596
Share price 2332 1790 2298 1266 1399
Shares outstanding 1039 1009.7 1023.2 1018.5 1021.4
Market value of equity
2422948 1807363 2351313.6 1289421 1428938.6
Weight of equity(E/D+E)
0.8953494 0.86103323 0.89505193 1 1
Greggs Plc
Calculation of WACC
Years 2021 2020 2019 2018 2017
Weight of Equity0.8953494
(E/E+D) 0.86103323 0.89505193 1 1
Cost of equity, re 0.07263 0.09568 0.01682 0.004 0.02596
Weight of debt0.1046506
(D/D+E) 0.13896677 0.10494807 0 0
Interest cost rd
0.02609149 0.02573141 0.02466449 nil nil
Tax Rate (T) 0.19299451 0.05109489 0.1966759 0.20430173 nil
WACC 0.06723275 0.08577676 0.01713417 0.004 0.026
Greggs Plc 2021 2020 2019 2018 2017
Weight of Debt0.1046506 0.13896677 0.10494807 nil nil
After Tax Cost0.02105598
of Debt 0.02441666 0.01981358 nil nil
Cost of Financial
0.08359462
Distress 0.1145501 0.08513449 nil nil
Company A - Domino’s Company B - Greggs

Appendix 4
Corelation coefficient
Table 15

B Greggs
xi yi
FT250 X Plc xi - yi - ∑ (xi - )2 (yi - )2
2017 19,598.73 1092.971 -308.53 -634.68 1,95,815.96 95,189.73 4,02,815.40
2018 19,844.03 1160.825 -63.23 -566.82 35,839.30 3,997.82 3,21,288.85
2019 19,748.52 2013.834 -158.74 286.19 -45,428.21 25,197.33 81,902.42
2020 17,938.96 1621.732 -1,968.30 -105.92 2,08,474.93 38,74,185.21 11,218.31
2021 22,406.04 2748.88 2,498.79 1,021.23 25,51,841.07 62,43,943.13 10,42,913.54
Mean 19,907.25 1,727.65 Totals 29,46,543.05 1,02,42,513.23 18,60,138.52

r= 0.67505
B Dominoes
xi yi
FT250 X Plc xi - yi - ∑ (xi - )2 (yi - )2
2017 19,598.73 270.9135 -308.53 -24.09 7,432.11 95,189.73 580.28
2018 19,844.03 247.7691 -63.23 -47.23 2,986.48 3,997.82 2,230.99
2019 19,748.52 258.995 -158.74 -36.01 5,715.69 25,197.33 1,296.53
2020 17,938.96 316.6038 -1,968.30 21.60 -42,517.91 38,74,185.21 466.62
2021 22,406.04 380.7306 2,498.79 85.73 2,14,216.55 62,43,943.13 7,349.32
Mean 19,907.25 295.00 Totals 1,87,832.92 1,02,42,513.23 11,923.73

r= 0.53748
Company A - Domino’s Company B - Greggs

Appendix 5
Table 16

Greggs Greggs
Date Adj Close Returns Date Adj Close Returns
01/12/21 3337.0000 11.27% 01/12/20 1781.1211 6.23%
01/11/21 2999.0000 -1.83% 01/11/20 1676.6418 30.92%
01/10/21 3055.0000 4.15% 01/10/20 1280.6161 9.53%
01/09/21 2933.3770 -3.09% 01/09/20 1169.1716 -17.08%
01/08/21 3026.9109 10.42% 01/08/20 1409.9713 18.58%
01/07/21 2741.3345 6.17% 01/07/20 1189.0724 -26.23%
01/06/21 2582.1279 4.18% 01/06/20 1611.9644 -12.34%
01/05/21 2478.6438 5.55% 01/05/20 1838.8334 2.82%
01/04/21 2348.2937 5.17% 01/04/20 1788.4196 13.51%
01/03/21 2232.8691 7.57% 01/03/20 1575.6053 -22.78%
01/02/21 2075.6528 0.58% 01/02/20 2040.2822 -7.28%
01/01/21 2063.7124 01/01/20 2200.3809
Beta 1.1000000 Beta 1.4
Greggs Greggs
Date Adj Close Returns Date Adj Close Returns
01/12/19 2243.3342 10.37% 01/12/18 1198.6676 -9.18%
01/11/19 2032.4724 17.23% 01/11/18 1319.8599 20.07%
01/10/19 1733.7517 -13.57% 01/10/18 1099.2520 11.18%
01/09/19 2005.9506 -1.14% 01/09/18 988.7490 -0.75%
01/08/19 2028.9851 -5.46% 01/08/18 996.2467 0.85%
01/07/19 2146.0789 -2.70% 01/07/18 987.8119 5.88%
01/06/19 2205.5857 5.70% 01/06/18 932.9855 -5.73%
01/05/19 2086.5723 22.64% 01/05/18 989.6864 -11.83%
01/04/19 1701.4261 -2.28% 01/04/18 1122.5344 -0.81%
01/03/19 1741.1925 2.74% 01/03/18 1131.7430 2.85%
01/02/19 1694.7986 15.48% 01/02/18 1100.4337 -9.40%
01/01/19 1467.5630 01/01/18 1214.6209
Beta -0.1 Beta 1.2
Greggs
Date Adj Close Returns
01/12/17 1288.2903 5.35%
01/11/17 1222.9088 4.24%
01/10/17 1173.1820 3.06%
01/09/17 1138.3793 3.66%
01/08/17 1098.2120 9.36%
01/07/17 1004.1840 1.85%
01/06/17 985.9261 -0.83%
01/05/17 994.1422 3.34%
01/04/17 962.0045 3.07%
01/03/17 933.3680 8.41%
01/02/17 860.9694 0.62%
01/01/17 855.6874
Beta 0.118
Company A - Domino’s Company B - Greggs
Appendix 6
Z score

Table 17

In millions of GBP Dominoes

Total Assets 381 399 354 592 522
Working Capital -48 -39 19 35 -11
Retained Earnings 78.9 41.8 117.7 123.3 1123.5
Earnings Before Interest and Tax 81.5 89.4 81.4 106.4 115
Market Value of Equity 65 3 -41 -9 -59
Total Sales 474.6 493 508 505 561
Total liabilities 316 396 395 601 581
Total current assets 87 89 142 167 107
Total current liabilities 135 128 123 132 118
In millions of GBP Greggs
Total Assets 888.00 729.00 785.00 488.00 441.00
Working Capital 60 -46 -66 -5 -21
Retained Earnings 406.00 303.00 325.00 313.00 283.00
Earnings Before Interest and Tax 153 17 0 92 84
Market Value of Equity 3 1 2 1 1
Total Sales 1,230 811 1,168 1,029 960
Total liabilities 459.00 404.00 440.00 154.00 136.00
Total current assets 266.00 98.00 142.00 140.00 106.00
Total current liabilities 206.00 144.00 208.00 145.00 127.00