Current Ratio and Quick Ratio Compared to the previous year, current ratio and quick ratio respectively rose 0.01 (from 0.63 to 0.64) and 0.04 (from 0.15 to 0.19), but both of them were lower than 1. It indicates that the firm’s current assets were just sufficient to cover for 0.64 of the firm’s short term liabilities, and the firm was just able to settle 19% of its current liabilities instantaneously. Cash and cash equivalents had increased by 138.5% to £64.4 million. The cash generated from operating activities has a small fall during the year, however, the notes show that profit before taxation decreased by £33.2 million, caused by adverse conditional trades and a weak currency, which had some negative effect such as weak sales during peak selling seasons or extreme or unseasonal weather conditions, failing to compete effectively, and a loss of profit when experiencing low exchange rate. The amount of Debenhams purchased property, plant and equipment has less £11.4 million than last year, but increased £6.1 cost in purchase of intangible assets such as the control of production and goodwill. In financing activities, drawdown of revolving credit facility was up to £200 million which was 33.33 times bigger than last year. To obtain assurance on the effectiveness and the cash level in order to improve current assets to pay short term debts, and compliance with, the risk management framework, Debenhams issued £225 million senior notes at a coupon rate of 5.25% on 2 July 2014, at the same day, the Group cancelled its existing term loan and revolving credit facility and drew down on a new revolving credit facility amounting to £425.0 million. The different reductions in inventories and trade and other receivables, are £12.2 millio... ... middle of paper ... ...inancials. Both of two companies possessed the near short trade receivables collection period; it is seen as optimal, as it indicates that they could take a short time to turn its receivables into cash. However, the trade payable payment period of Debenhams was longer than Marks & Spencer’s around 11 to 21 days in these 5 years. It indicates that Debenhams has a higher creditworthiness or did a better job in taking full advantage of the credit terms allowed by suppliers, but maybe the managers of M&S have made payments promptly to avail the discount offered by suppliers. All in all, Marks & Spencer did a better job than Debenhams in 2014 financial year. It is worth mentioning that Debenhams joins M&S at Scunthorpe Retail Park, and the scheme was signed up in May 2012, and the New Retail Park was opened on the 24th October 2014, and it will be a new chance to compete.
Suppliers are mostly concerned with a company 's ability to pay on their liabilities. Therefore, the current ratio and the quick ratio are both looked at by suppliers. The current ratio takes a company’s current assets and divides that by the company’s current liabilities. This number is
Net working capital represents organization’s operating liquidity. In order to compute the net working capital, total current assets are divided from total current liabilities. When there is sufficient excess of current assets over current liabilities, an organization might be considered sufficiently liquid. Another ratio that helps in assessing the operating liquidity of as company is a current ratio. The ratio is calculated by dividing the total current assets over total current liabilities. When the current ratio is high, the organization has enough of current assets to pay for the liabilities. Yet, another mean of calculating the organization’s debt-paying ability is the debt ratio. To calculate the ratio, total liabilities are divided by total assets. The computation gives information on what proportion of organization’s assets is financed by a debt, and what is the entity’s ability to pay for current and long term liabilities. Lower debt ratio is better, because the low liabilities require low debt payments. To be able to lend money, an organization’s current ratio has to fall above a certain level, also the debt ratio cannot rise above a certain threshold. Otherwise, the entity will not be able to lend money or will have to pay high penalties. The following steps can be undertaken by a company to keep the debt ratio within normal
In now days Debenhams PLC is a top department group of 166 stores in the UK, Republic of Ireland and Denmark, and employs 25.000 people. In addition, it controls 60 international franchise stores in 23 countries. Debenhams offers products for women, men, children and houses. It seeks to complete the in-store and online business in order for customers to have the maximum of choices for their shopping [2].
Looking at the individual ratios seen in exhibit 1 and comparing it to the industry average shown in exhibit 2 gives a sense of where this company stands. Current ratio and quick ratio are really low and have been decreasing. For 1995, the current ratio is 1.15:1, which is less than the industry average of 1.60:1, however to give a better sense of where this stands in the industry, as seen in exhibit 3, it is actually less than the average of the bottom 25% of the industry. The quick ratio is 0.61 is less than the industry is 0.90. Both these ratios serve to point out the lack of cash in this company. The cash flow has been decreasing because, it takes longer to get the money from customers, but the company still needs to pay for its purchases. Also, the company couldn’t go over the $400,000 loan limit, so they were forced to stretch their cash.
... value, however, depreciation affects such values as operating profit and value of the company’s assets. If the depreciation is ignored, the Net Income calculations will be erroneous.
Losses (from the sale of long-term assets below the original price paid by the company.)
...ense has decreased 82.8% from 2000 to 2004. All the above are contributing factors in Applebee’s achieving higher earnings, a 75% increase in net earnings from 2000 to 2004. Average shares has fall due to consistent share repurchasing programs by Applebee’s. Overall, the common-size analysis of the income statement are relatively consistent over the five years of study. Cost of goods has stayed consistent between 74%-75%, the Depreciation and amortization is between 9%-11%, income from Continue operations and Net Income are also both between 9%-10% in common-size analysis for income Statement. No unusual flutuations has been discovered.
This assignment will attempt to determine why Marks & Spencer nearly collapsed and what they have achieved in terms of success and failure as part of their recovery programme.
According to the annual report of Mark& Spencer, they has been set up 776 stores in the Uk and aim to keep selling high quality ,great value food and staying ahead in womenswear, lingerie and menswear. Moreover, M&S has attributed the high level of trust on the high street, and has also concentrated on ensuring their corporate governance is meaningful, relevant and underpin their decision-marking with high quality in all areas of strategy, performance, responsibility and accountability. Their collective and individual performance review is constructed by honest and constructive feedback to make the border play the biggest role in the boardrom. The goverance framework is also published on their website. Therefore, M&S's shareholders and stakeholders can easily find what standards the board of M&S set for themself.
Rondo's Current Ratio is a steady at 2.0 compared to the industry average of 1.4. This indicates the company will not have a problem covering its current liabilities. Rondo's quick ratio is also steady at 1.4. The company can cover its short-term debt 1.4 times over without selling off its inventory. Rondo's performance is good in this area.
The current cash debt coverage ratio dropped from 3.38 to 2.69. This is because the increase in cash from operating activities (26%) is lower than the increase in the average total current liabilities (58%). Again, IQ seems to remain highly liquid nevertheless.
At that point, a little over six months in, I came to certain conclusions about the Company's strategy ... and it took six months because Marks & Spencer is a very unique and very complex company.
The current situation puts Sainsbury's in the UK's third-largest supermarket chain, with a market share of around 16% .with 823 stores, unveiled profits of £488m, up 28% on last year's levels, with 15 consecutive quarters of sales growth,
Before beginning an analysis of a company it is necessary to have a complete set of financial statements, preferably for the pas few years so that historical trends can be obtained. Ratios are a way for anyone to get an idea of the financial performance of a company by using the information contained in the financial statements. Ratios are grouped into four basic categories, liquidity, activity, profitability, and financial leverage. This document will use a variety of these ratios to analyze the firm, Sample Company, as of December 31,2000.
A benchmarking analysis against competitors is provided in excel. These data indicate that Primo was performing poorly against its three competitors in terms of day’s receivable and day’s inventory. The fact that day’s payable was 40 days versus 30 days for the credit terms offered by its suppliers, and much higher than for its competitors, helps explain much of the reason for complaints from the company’s suppliers about late payments. In the future, Primo might have limited access to supplier credit, and suppliers might ultimately refuse to sell to the company unless payment is made up front in cash. The data also indicate that the company was performing poorly against its competitors in every profitability metric displayed.