Marks and Spencer PLC financial performance- answer 3 questions Essay

Marks and Spencer PLC financial performance- answer 3 questions - Essay Example See Table A below in relation to Appendices A, B, C and A-1. It may be noted that return on equity uses the formula where net profit is divided by the total stockholders’ equity. When compared to an average rate of 0.50% if money was invested in a bank, its average ROE of 35% makes it to more than a seventy times and the rate is something very remarkable to find for investors. The 0.50% is the Bank of England base rate could represent the risk free rate investment in the UK (Housepricecrash, 2011). Aside from profitability, it is also appealing to know whether the company management is efficient. To measure the latter, this paper uses return on assets (ROA). The company’s average ROA of 9% for the last six years was higher than industry average of 1.6%. GAP appeared to have higher average ROA but ROE is more controlling from the point of view of investors (Van Horne, 1992). By comparing the two ratios, it appears that MKS is both profitable and efficient than industry. The understandable profitability and efficiency of the company is further proved by the company’s net operating margin and net profit margin. The resulting average operating margin and average net profit margins for the past six years are 11% and 7% respectively as against the industry averages of 2.02% and 1.13% respectively. Operating margin results after deducting cost of sales or services and operating expenses from gross margin (Helfert, 2001) MKS’s net margin for the latest twelve-month period was posted at 5.7% as against industry average of 0.23%. See Table A. If the rate is compared the operating profit margin, it could be found that net profit margin is lower. This means that MKS needed to spend other expenses to finance some of its borrowing. It further means that MKS is using other people’s money while improving profitability for

MYOB-analysis Essay Example | Topics and Well Written Essays - 500 words

MYOB-analysis - Essay Example The past three years’ accounts should be provided as a minimum, to enable a full financial assessment that reveals trading patterns and trends in the areas of liquidity, profitability, the speed of debtor and creditor payments, sales and their associated costs, as well as expenses and owner’s drawings. Information providing the reasons for the proposed expansion of the business and why a partnership approach has been chosen, rather than, say, a bank or other loan. The proposal as it stands seems to allow Chris Wren to take advantage of the increased capital base provided by a partner’s investment, without giving them any say in how the business is run or allowing them to get involved. He wants more supporting funds, and he wants to continue running the business as he has been doing for the past few years, which may not be the best way to do it. If the new partner is not to undertake any work, who will be doing the extra work that an expansion should be aiming to acquire? There are no projections for increases in sales or the associated increased cost of sales and supporting expenses. There is no business plan at all and a basic plan should be in place at the moment to provide an objective for the business to achieve. If there is no plan, then what precisely is the investment needed for? What’s in it for the potential investor, specifically? What sort of profit levels will be generated by the expanded business and what rate of return does this represent? How does this compare with other businesses in the same sector, or a basic bank savings account or perhaps a managed stock market investment plan? Why is this a good idea for the investor? Important information that cannot be provided in numbers is missing, such as the business reputation and skill and experience of staff. Non-financial information, such as firm location, supplier and customer relationships and business