Analysis Of Dixon's Retail Plc

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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

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