ITV Plc is a company on UK london Stock Exchange. This report calculates it important financial ratios to give a pitcure of its financial position in the market comparing by comaparing it to its industry average.
From Annual report of year 2011 of ITV Plc .
Financial Performance Analysis:
This section aims to reflect the financial performance of the ITV Plc by analysing a range of financial ratios from the last two years. A comprehensive evaluation is provided of the significant ratios and later it is compared with its peers and sector ratios.
Liquidity Ratios
Basically the liquidity ratios are used to determine a company’s ability to cover its short term obligations when are in financial distress and these obligations are due.
…show more content…
It can be seen that operating profit margin has increased from 2010 to 0.19% in 2011. In other words £0.19 is operating profit is earned on every pound of sales. There is a huge difference in numbers when compared to the industry average. There is a need of introducing new sales strategies to improve sales and profit and make their position better in the industry. To attract potential investors operating profit margin needs to be improved.
Total Asset Turnover
This ratio is useful to determine the amount sales that are generated from each pound of assets. It can be seen that ITV has increased its total asset turnover compare to 2010. This is an improvement and it is also close to the industry average. Basically ITV is generating £0.74 in sales for every pound invested in assets.
Fixed Asset Turnover
This ratio shows what portion of sales is generated from fixed assets investment. It basically tells how well the company uses its fixed assets to generate revenue. In other words this means that £0.015 of sales is generated for every pound investment in fixed assets. It can be seen that ITV is generating less from the other in the industry. It needs to improve its sales from fixed assets and get close to the industry average.
Financial Strength Ratios Financial Strength | Ratios | Formula | 2011 | 2010 | Peer Average | Sector |
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.
Secondary information is collected for this case. This case study limited only one techniques of financial analysis that is Ratio Analysis and also taken a single company. Thus the conclusion of the analysis carried out in a professional manner will be able to correctly describe the evaluation of the company and to substantiate the user’s decisions.
The relevance of evaluating both the financial performance as well as position of Tesco PLC cannot be overstated. This is more so the case given the need to determine the stability and viability of the company going forward. This text seeks to evaluate the financial performance as well as position of Tesco PLC by amongst other things analyzing the entity's financial statements. In this case, the evaluation will be based on the company's recently published annual accounts.
The analysis of a company's financial statements helps in the determination of both the weaknesses and strengths of the concerned entity. Further, such an analysis helps in the determination of the future viability of firms. There are a wide range of techniques utilized in the analysis of financial statements. In that regard, it is important to note that the relevance of a horizontal, vertical as well as ratio analysis of a company's financial statements cannot be overstated. This is more so the case when it comes to the interpretation of the various dollar amounts presented in both the balance sheet and the income statement. In this text, I carry out a horizontal, vertical as well as ratio analysis of both The Coca-Cola Company and PepsiCo, Inc. The analysis' results will be critical in the evaluation of each company's performance. Findings will be used as a basis for recommendations on how each company can improve its financial status.
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.
This paper examines financial ratio analysis by defining, the three groups of stakeholders that use financial ratios, the five different kinds of ratios used and their applications, the analytical tools used in analysis, and finally financial ratio analysis limitations and benefits.
Liquidity represents a company’s ability to pay its short-term obligations. In the following schedule is the calculation of the ratios that are indicators of the liquidity position of a company.
The fixed asset turnover ratio measures the sales dollars generated by each dollar of fixed assets used.
During the period 2012 and 2013, the Operating profit margin decreased from 9.2% to 5.7%. This slight decline can be attributed to the decreased revenues and the increase in tax expenses.
To work out the profitability of Sky PLC various ratios can be carried out. For the purpose of this report four have been carried out.
Before beginning an analysis of a company it is necessary to have a complete set of financial statements, preferably for the pas few years so that historical trends can be obtained. Ratios are a way for anyone to get an idea of the financial performance of a company by using the information contained in the financial statements. Ratios are grouped into four basic categories, liquidity, activity, profitability, and financial leverage. This document will use a variety of these ratios to analyze the firm, Sample Company, as of December 31,2000.
Interest Expense Rate is continuously increasing from 1992 to onward. It shows that company is paying high financial charges over short term and long term borrowings.
The calculation of ratios is the calculation technique for analyzing a company’s financial performance that divides or standardize one accounting measure by another economically relevant measure. Financial ratios can be used as a tool to demonstrate financial statement users for making valid comparisons of firm operating performance, over time for the same firm and between comparable companies. External investors are mostly interested in gaining insights about a firm’s profitability, asset management, liquidity, and solvency.
Firms and Companies include ‘Ratios’ in their external report to which it can be referred as ‘highlights’. Only with the help of ratios the financial statements are meaningful. It is therefore, not surprising that ratio analysis feature are prominently in the literature on financial management. According to Mcleary (1992) ratio means “an expression of a relationship between any two figures or groups of figures in the financial statements of an undertaking”.