The following analysis will help to determine whether or not Dixons Retail plc’s performance within the industry is good. It will also show if the company’s financial position is stable in comparison to other business within the same market. The analysis is broken down in several bullet points containing information about relevant financial ratios that are useful to understand the business performance. 1. Gross Profit Margin Ratio The gross profit margin is a useful tool that helps to evaluate the financial performance of a business. Ideally, a company’s gross profit margin ratio should be stable in order to be able to pay for its expenses and generate profit. Dixons Retail plc shows stability in both statements. The results of 7.32% (2013) and 7.47% (2014), indicates that the company has not been going through any forceful financial strategy changes that can affect the business performance. The comparison of …show more content…
Average inventories turnover period According to (Mclaney E., Atrill P. 2012 p. 255), “The average inventories turnover period is the average time for which inventories are being held”. Having a long turnover period will have a negative impact on the business, generating unnecessary costs such as rent for goods space. According to the business case, Dixons Retail plc had an average inventory turnover period of 6 weeks in 2013 and around 5 weeks in 2014. The average turnover period for the industry is 4 weeks. This indicates that Dixons is not doing bad in terms of selling its products, as 5 weeks should not represent a potential threat to the business. However, the company still needs to improve its numbers by locating any flaws in within internal processes. A market research could be useful in order to discover if the company is offering obsolete goods for example. 6.Interest cover ratio Mclaney E., Atrill P. talks about Interest cover ratio as “a gearing ratio that divides the operating profit by the interest payable for a period”. (2012, p
Speedster Athletics Company has been able to generate favourable gross margins over the last three years consistently over the industry average of 26%. Gross margin is in a declining trend over 2010 to 2011 where 2011 gross margin is 27% (1371/5075*100%) which is 1% lower than 2011, however this is above the industry average level, proving that Speedster company is capable of generating better margins.
Inventory Turnover in 2010 was 88.81 and its trailing 12 months has increased to 98.51.
.... In addition, inventory turnover shows a consistent increase from 2.16 in 2011 to 2.38 and 2.49 for 2012 and 2013 respectively.
The objective of this report is to give an overall view on research and analysis to regards of two companies, Wm Morrison Supermarkets Plc and Tesco Plc that I have chosen for. In this report, I will be comparing two companies’ financial analysis based on their comprehensive income and balance sheet for one year; and also will be comparing their generating cash ability, cash management and financial adaptability based on statement of cash flows for the past two year and also determine whether the two companies have the ability to repay their debts to their creditors, generating into cash and going concern which related to finance.
When analyzing Apple’s Accounts Receivable Turnover Ratio, the ratio is lower than the average industry. The ratio shows 11.96 times in account receivable collections during the year and how efficiently Apple uses its assets (Miller-Nobles, Mattison and Matsumura 781-782). Account receivable collections will increase after the release of the iPhone 6 and iPhone 6Plus by mid-September. Therefore, increasing the ratios of account receivable turnover and inventory turnover.
1. Context: In early September’08 Giant Consumer Products, Inc. (GCP) realized that Frozen food division, which had been growing at 2.8% (compounded annual growth) rate since 2003 to 2007 and accounted for almost 33% of GCP’s overall business volume, is not doing well now. The sales as well revenue volume is around 3.9% behind the target. Most specifically marketing margin (key parameter for GCP business) was also under plan by 4.1%. GCP had been doing well in wall-street but performance of past couple of quarters has increased the worries of GCP i.e. whether GCP will able to maintain its profitable growth.
The increasing revenue provides the first sign of strong fundamentals, and the rising margins show increasing profitability, which will be analyzed in the Profitability Analysis section.
The inventory issue also ties in with transportation problems where accurate lead and delivery times are non-existent. The inventory turnover is not at its full potential because if the DC has merchandise yet the stores are stocked out, the inventory is frozen and will become obsolete.
He soon became a successful trader in other London markets outside of the East End and also branched out into wholesaling for other market traders.
Its receivable turnover is 13.4 times per year, which is higher than C-P 10.5. In addition, the average number of days from sale on account to collection for P&G is 27.2 days while for C-P is 34.8 days. Based on the efficiency ratio analysis, P&G’s inventory moves quickly from purchase to sale, which the inventory turnover ratio is 6.2 and the time for the purchased inventories to be on sale is on the average of 58.6 days while C-P’s turnover ratio is 5.2 and the average days to sell is 70.6. This shows that P&G takes a shorter time than C-P to sell their inventories. However, C-P has a higher ability to pay their short-term liabilities, whereby the current ratio is 1.08 as opposed to P&G
After ASDA became part of the Wal-Mart family, are now spread globally around the world. I have chosen this organisation because I can obtain information easily as I have an ASDA Superstore two minutes away from my house in Longsight. I have produced a LongPest grid for ASDA Plc. The LongPest grid is explained in detail below. For the LongPest grid for ASDA Plc, see separate sheet.
...o measuring the number of times per period, a business sells and replaces its entire batch of inventory again. In general, a higher value of inventory turnover indicates better performance and lower value means inefficiency in controlling inventory levels.
Profitability ratios express ability of the company to produce profit. This shows how well a company is performing in a given period of time. To compare the profitability for the companies, the investors use profitability ratios that are return on equity, profit margin, asset turnover, gross profit, earning per share. Return on asset indicates overall profitability of assets. It is the relationship between net income and average total assets. GM has 0.034 and Ford has 0.036. This indicates Ford is more profitable. Profit margin is how much of every dollar of sales the company keeps. Computing profit margin, net income divided by net sales. This indicates higher profit margin is more profitable and it has better control. Thus, GM’s profit margin is 3.4 percentages and Ford’s is 4.9 percentages. This indicates Ford has better control profitably compared to GM. Next ratio is gross profit rate. It is how much of every dollar is left over after paying costs of goods sold. Assets turnover represents how efficiency a company uses its assets to sales. This ratio is relationship between net sales and average total assets. GM’s is 0.98 and Ford’s is 0.75. This result represents GM is using its assets more efficiently. Gross profit margin is dividing gross profit, which is equal to net sales less cost of gods sold, by net sales. This ratio indicates ability to maintain selling price above its cost of goods sold. GM’s gross profit rate is 11.6 percentages. Ford’s is 5.7 percentages. GM is higher ratio, and it indicates strong net income. Also, it indicates the company has to spend lower operating expenses and the company is able to spend left money for covering fixed costs. Earnings per share indicate the company’s net earnings to each share common stock. This ratio shows margin between selling price and cost of goods sold. From these companies’ income statement, GM is $2.71 and Ford is $1.82. Because GM’s value is higher relative to Ford’s,
The aims of inventory management are the following: a) provide both internal and external customers with the required service levels in terms of quantity and order rate fill, b) ascertain present and future requirements for all types of inventory to avoid overstocking while avoiding ‘bottlenecks’ in production, c) keep cost to a minimum by variety reduction, economical lot sizes and analysis of costs incurred in obtaining and carrying inventories, and d) provide upstream and downstream inventory visibility in the supply chain.
Bibliography: Lawson, A. (2013). Analysis: Is Asda’s five-year strategy the right one?. [Online] Retail-week.com. Available at: http://www.retail-week.com/sectors/food/analysis-is-asdas-five-year-strategy-the-right-one/5054989.article [Accessed 23 Jan.