Essay about Financial Analysis of Ted Baker

2352 WordsDec 16, 201310 Pages
REPORT To Mr. D.G. Farmer From an analyst working for Devon Fund Managers (DFM) Date 15 / 03 / 2013 Devon Fund Managers A regular report that analyses industry and performance of Ted Baker plc. based on the Ted Baker Annual Report 2011-12. Executive Summary This report is going to analyse and evaluate the Ted Baker plc. by providing the most important ratios of the company and interpretations to them. Furthermore, it is going to recommend to hold shares of this company to existing shareholders and also recommend potential investors to purchase the shares of Ted Baker plc. since the return of the company is expected to be high in the nearest future. 1. Introduction This…show more content…
2.2 Vertical Analysis Table 2. [1] (Workings in Appendices 1) In vertical analysis, it is easier to see elements as a percentage of Revenue. Between 2011-12, the portion that cost of sales takes in revenue has increased however, there is a bigger deterioration in distribution cost. In 2011, 9.21% of revenue remains as profit but in 2012 this figure decreases to 8.14%. Despite reduction in costs is one of the strategies of Ted Baker(part 1.4), analysis illustrates that costs increase each year. 2.3 Ratio Analysis 2.3.1 Profitability ratios Profitability Ratios Type 2012 2011 2010 Return on Capital Employed (ROCE) 28.02% 31.11% 28.40% Operating Profit Margin 11.26% 12.86% 12.09% Gross Profit Margin 61.31% 61.68% 61.09% Table 3[1] [9] [10] (Workings in Appendices 1) Profitability ratios are basically figures to measure if the company is doing well in the terms of profit[13]. ROCE ratio has increased in 2011 but in 2012 it deteriorates by 3%. This fall indicates that company was not successfully getting high returns as a percentage of its resources available, compared to 2011. 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

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