Next Plc Accounts Essay

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.

The financial performance of the company over the years six t thirteen is shown in table no 7. The data includes Revenue generated over the years, Earning per share, Return on Investment and Stock Prices. Chart 5 shows that there has been a decline in the revenues generated. Charts 6 to 8 all show a decline in Earnings per Share, Return on Equity and Stock Prices suggesting a poor financial performance by the company.

BALANCE SHEET |Dec 1990 |Jan |Feb |Mar |Apr |May |June |July |Aug |Sept |Oct |Nov |Dec | |Cash |175 |556 |724 |175 |175 |175 |175 |175 |175 |175 |175 |175 |175 | |Accts receivable |2,628 |958 |234 |271 |270 |250 |250 |270 |1,603 |3,113 |3,580 |3,982 |3.063 | |Inventory |530 |948 |1,355 |1,749 |2,157 |2,564 |2,971 |3,365 |2,904 |2.314 |1,549 |697 |530 | |Net P/E |1,070 |1,070 |1,070 |1,070 |1,070 |1,070 |1,070 |1,070 |1,070 |1,070 |1,070 |1,070 |1,070 | |Total Assets |4,403 |3,533 |3,383 |3,265 |3,672 |4,059 |4,466

Current Liabilities = $940,000 $200,000 = 4.7 (2) Quick ratio = Cash + Cash Equivalents + Short Term Investment + Current Receivables Current Liabilities = $500,000 + $350,000 $200,000 = 4.25 (3) Debt-to-total assets ratio = Total Debt Total Assets = $1,000,000 $ 2,375,000

{. How many consecutives years the company has been profitable, its current ration and its ROE

11 Revenues, Expenses, & Net Income ......................................................................................... 12 EBIT / EPS Analysis ................................................................................................................. 13 a II. Lowe‟s Past & Current Strategies ........................................................................................... 1

Net profit of about $0.04 is made on each dollar of sales. They need to lower their costs, so

The liquidity ratios of the firm are slightly below the industry averages. This is due to inventory and accounts receivable making up a significantly larger portion of the current assets than cash and marketable securities. This may be indicative of a problem with inventory management and/or collection on accounts.

Based on Next Annual Report and Account January (2011), the chief executive's review present the A New Normal of company overview, due to the changing consumer environment, Next PLC need to have New avenues of growth, and brand new way to control cost, also, it will be important that retailer have to generate the healthy cash flow with cautious management. Furthermore, enable to know how company efficiently use asset to generate revenue and whether there was improvement between 2010 and 2011, the activity ratios have to calculate out. The ROCE in 2010 and 2011 were 38.91%,41.79%, this number showed how profit generated by capital employed, and the growth figure of ROCE lead to level up efficiency asset used.((NEXT PLC, 2011 page43, 45) The figure for inventory turnover, receivable turnover, and payable turnover in 2010 and 2011 were 46.81 days, 54.98 days; 66.07days, 68.23 days; 83.36days,81.3days; respectively. (ibid) It is clearly show that the inventory and receivable turnover in 2010 was taken lesser day than 2011, in which means inventories took less day to sold out to costumer and the cash credit receive more faster than the 2011, besides, the payable turnover had longer period than 2011, it was also a good example to illustrate that there was more cash flow holding by company, and the overall image of these figure present that the resource had been

The current ratio has slightly decreased by 0.7 cents from 4.2:1 to 3.5:1. The main reason for this trend, because the current assets contained too many accounts receivables and inventories, and even though it was no cash available in 2015. Therefore, it indicates indirectly the company liquidity was very poor. In fact, majority of companies expected a healthy current ratio of 2:1, which reflects they should be able to meet its current debts with current assets as the trend is satisfactory (Smart, Awan, & Baxter, 2013).

The primary aim of this study is to use significant financial ratios to analyse Next Plc to show their performance and year 2013 was chosen for this analysis. The main questions include “what is their performance, should the Company be sold off or kept, what is the reason for their bad or good performance?”

Another ratio we will look at is total asset turnover rate. Total asset turnover rate measures how efficiently a company uses its assets to generate sales. In 2001 the total asset turnover rate was 1.079 and in 2000 it was 1.193. The fixed asset turnover ratio is similar to the total asset turnover ratio but includes only fixed assets. The fixed asset turnover rate measures the capacity utilization and the quality of fixed assets and was 3.771 for 2001 and 3.854 for 2000.

Before doing any calculations there are many important observations and conclusions that can be drawn from analysing Kraft’s financial statements from a fundamental perspective. Kraft has gone through some major changes in the past 4 years with the many acquisitions and divestitures they have undergone and these changes have had major implications on the financial statements.

Financial performance Revenue, DKK million Profit before special items, DKK million Tax on profit for the year, DKK million Net profit for the year, DKK million Operating margin (ROS) Return on equity (ROE) Return on invested capital (ROIC) 11,661 3,002 -683 2,204 24.9% 82.3% 139.5% 9,526 2,004 -500 1,352 22.0% 72.2% 101.8% 8,027 1,471 -386 1,028 18.1% 71.6% 69.7% 7,798 1,405 9 1,290 17.0% 147.1% 63.6%

Other indications of profitability are the ROA, ROE and the return on fixed assets indicators. Having them all decreasing with the exemption of one being Inventory turnover, increasing with 4.3 percent. This gives the impression of better management within efficiency of inventory, thus having a decline in ROA and ROE, falling by 7.9 percent and 9 percent in that order.