An Interpretation of the ratios for Marks and Spencers and the House of Fraser

David Jones’ gross profit margin for the past three years has remained stable with minimal fluctuations. The following calculated figures are for the year 2010, 2011, 2012, and 2013; 39.73%, 39.10%, 37.50% and 37.8% respectively. Such an observation is desirable as it is indicative that the company is financially stable as it is generating enough income to cover its operating expenses and make savings. It suggests that the industry in which the company operates has not experienced drastic economic fluctuations that can affect the company’s cost of goods sold. However,

In the last two years, sale growth and dividends have been growing hence attracts investors but in 2014/15 declines were seen. This shows specific targets are measurable demonstrating that businesses are just not about making a profit but impersonates that if known to people, Sainsbury’s will be viewed as ethical and green thus increasing possibilities in enticing and retaining consumers than their competitors. Furthermore, measures of profitability such as expenses, labour cost and sales revenue in relations to business resource derives a degree of success towards business objectives. Gross profit margin measures differences between cost of sales and sales revenue; a measure of profitability in purchasing and selling before expenses. From Sainsbury’s income statement: gross profit margin saw a decline by 0.71%, that too both gross profit and revenue decreased, perhaps sales prices were higher or decreases in purchasing. The Yorkshire Post (2015) suggests that Sainsbury’s growth sales for online have risen overall; the strategic report supports there has been a fall in sale growth in supermarkets but as total sales growth it contributes to increased revenue with food price deflation, price reduction and price matches impacting performance also. Robinson (2014) expresses Lidl and Aldi have been serving more customers

This model was developed by Michael E. Porter in 1980. He identified 5 forces that shape every industry and determine its attractiveness and potential profitability. These forces as described as follows:

The main purpose of this report is to analyse David Jones’ business performance and to determine whether it is a worthwhile investment. Two main points will be closely examined: classification of non-recurring items and recurring items, and ratio analysis. First, clarifying the generation of income made by ordinary activities and extraordinary activities will enable us to estimate the firm’s real earning power. Second, analysing historical financial data, using ratios, will enable us to understand the quality of the firm’s performance, such as profitability or efficiency. Analysis is also performed by comparison of David Jones’ ratios with others: I have compared Myer’s and industry average data with David Jones.

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Mr Price has 29 successive reporting periods of profit growth and 81,4% in cash sales. They have recently opened stores in Australia, as well as Nigeria, proving international growth. This international growth has helped increase retail sales by 8,6%, equivalent to 8,5 billion rand. This is a large increase compared to comparable competitors which only have a 4% increase! such as Edgar's. The operating profit and margin, basic and headline earnings per share, as well as the dividend per share has increased by an average of 15,6 percent.

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The reason of writing this report is to compare the J Sainsbury supermarket plc at the year 2009 and 2010 to know the accounting ratio is used in estimate the financial performance. This report prepared by Velavan Palaniandy and Nguyen

After a decline, the company’s profitability (ROI, ROCE, Operating margin) has improved recently. However, the gross margin has dropped for five consecutive years, suggesting that selling prices are not being increased to pass on purchase (or production) cost increases. This deteriorating margin is a significant

In 2009, the operating profit was 3.56% which was slightly above than the previous year. After deducting all the expenses, the left amount is the net profit and the proportion of net profit in respect to total revenue is the net profit margin. Sainsbury’s net profit margin for the years 2009, 2008 and 2007 were 1.53%, 1.84% and 1.89% respectively. The management thinks that the tough market condition and the other competitors with very cheap pricing have pushed them to squeeze their profit margin ratio. The graph below shows the Return on Capital Employed as well. The ROCE gives the idea about how much return a company is making on its used capital. (investorwords.com) The ROCE for the company was 9.46%, 7.10% and 7.59% for the years 2009, 2008 and 2007 respectively. The year 2009 proved to be a little bit more in context of return on capital employed.

Following the appointment of a new CEO in 2004, Marks and Spencer (M&S) had a significant change in company vision and strategy. This included modernizing stores and tightening cost control which resulted in significant improvements to operating margins. However, the company has recently struggled to increase their customer base and has become far too reliant on previous customers. Furthermore, the company has come under scrutiny for various accounting choices resulting in negative analyst attention.

The Project Includes the Reports of the Three Companies That Are Metcash and its Competitors That Are Woolworths And Wesfarmers.