Financial Analysis of I.T Ltd.

Financial ratio analysis is a valuable tool that allows one to assess the success, potential failure or future prospects of the company (Bazley 2012). The ratios are helpful in spotting useful trends that can indicate the warning signs of

This report will analyse and outline the company’s profitability, liquidity, solvency and investment potentials based on 15 ratios. All information is taken from the Next plc 2011 statement.

A typical Gross profit margin depending on the industry may be 25 to 30%. Nucor’s Gross profit margin ratio indicates that industry is intense and cost of goods is one of the main of factor in profitability. After examining the five year

In the latest quarter, TGT improved gross margin to 30.2%, improved 80 bps over the prior year period. Its EBITDA margin rate enlarged 130 bps to 9.9%.

a few percent, in 2012 the gross profit margin is the highest it has ever been

Ratio analysis is a very useful tool when it comes to understanding the performance of the company. It highlights the strengths and the weaknesses of the company and pinpoints to the mangers and their subordinates as to which area of the company requires their attention be it prompt or gradual. The return on shareholder’s fund gives an estimate of the amount of profit available to be shared amongst the ordinary shareholders; where as the return on capital employed measures an organization 's profitability and the productivity with which its capital is utilized. Return on total assets is a profitability ratio that measures the net income created by total assets amid a period.

In terms of industry profitability, it appears that profit margins have a tendency to fall. This is because competition is high and customers tend to buy low-priced high-value items. The average gross margin and net profit margin is 37.1% and 14.3%, respectively (MSN Money, 2010).

Also, according to its leverage ratios, the company’s debts are not only very high, but are also increasing. Its decreasing TIE ratio indicates that its capability to pay interests is decreasing. The company’s efficiency ratios indicate that despite the fact that its fixed assets are increasingly being utilized to generate sales during the years 1990-1991 as indicated by its increasing fixed asset turnover ratio, the decreasing total assets turnover indicate that overall the company’s total assets are not efficiently being put to use. Thus, as a whole its asset management is becoming less efficient. Last but not the least, based on its profitability ratios, the company’s ability to make profit is decreasing.

The Gross profit margin stays relatively constant at around 36 %. However, there is a slight rise from 2000 to 2004.

Day by day the profit margin is increasing because of budget products, supply chain management, dedicated staff and unique variety are the add value for primark brand.

The aim of this paper is to analyse the financial position of Melbourne IT limited through the use of financial ratios, based on the annual report for the periods December 2012 and 2013. Financial ratios are useful since they measure a company’s performance and give an overview of the financial situation. Ratios are also used to analyse trends and to compare a firms financial figures to other competitors within the same industry.

Operating profit margin figures in the table above show the return from net sales[13]. However profit margin ratios are high enough for the 3 years, there is a fall from 12.86% to 11.26% during 2011-12. Sales revenue increases with a higher rate than gross profit so there is a poor

The cash flows from investing shows the company has made very large investments in property, plant and equipment. The cash flows from financing shows that the repayment on account of borrowings has been financed by either another loan or by issuance of share capital. The following amounts are in thousands.

Clearly, Net profit margin is decreased in 1994. In 1992 it was the highest then it is showing downward trend. It is the only cause which is lowering Return over Equity (ROE).

Gross Margin (Total Revenue-COGS/ Total Revenue): Wal-Mart has attained 24.74% gross margin compared with competitor average of 17%. This shows that Wal-Mart is able to achieve significant scale economics and translate some of its benefit to the customers(Walmart's Keys to Successful Supply Chain Management. (2013).)