Business Finance {Compass Group}

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Compass Group Plc INTRODUCTION Compass group Plc is a market leader in providing food and a range of selected support services to customers in the workplace, schools and colleges, in hospitals at leisure or in remote environments. The company has a unique approach to achieve strong sustainable leadership positions in markets that offer potential for profitable growth. It announces that “We bring together the combined strength of a group which operates in 50 countries, with more than 428,000 employees, to deliver the same superior standards of service globally, daily, personally”. The history of Compass Group in the UK dates back to 1941, when Jack Bateman founded factory canteens to feed British workers supporting the war effort. In…show more content…
Fixed assets turnover: Fixed assets turnover ratio is also known as sales to fixed assets ratio. This ratio measures the efficiency and profit earning capacity of the concern. Higher the ratio, greater is the intensive utilization of fixed assets. Lower ratio means under-utilization of fixed assets. The turn over of compass has stayed the same way from 2009 to 2010 they had a turn over only 3 times. See appendix figure 2 2. Stock turnover: Stock turn over ratio and inventory turn over ratio are the same. This ratio is a relationship between the cost of goods sold during a particular period of time and the cost of average inventory during a particular period. Stock turn over of compass was 7 times in 2009 and decreased to 6 times in 2010 this indicates the number of time the stock has been turned over during the period and evaluates the efficiency with which compass is able to manage its inventory. This ratio indicates whether investment in stock is within proper limit or not. See appendix figure 2 3. Debtor’s collection period: Debtors turnover ratio or accounts receivable turnover ratio indicates the velocity of debt collection of a firm. In simple words it indicates the number of times average debtors (receivable) are turned over during a year. Significance: Accounts receivable turnover ratio or debtor’s turnover ratio
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