Financial Performance of a Company Operating in Retail

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Running head: ACCOUNTING
Accounting
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Author Note
Student number:

1
ACCOUNTING
Abstract:
The paper reviews the financial performance of a company operating in retail sector
of United Kingdom that is listed on the London Stock exchange. The chosen
company for the analysis of the financial performance is Hanford Plc. The financial
performance is assessed in terms of liquidity, profitability, efficiency and market
ratios for over a time period of four years. Based on the overall analysis of Hanford
Plc, it is recommended to the potential investors seeking to make investment of
amount £ 3 million to wait for a while before making investment. Although, the falling
value of few ratios indicating the profitability and efficiency position of company does
not implies the poor financial performance of the company.
Student number:

2
ACCOUNTING
Table of Contents
Introduction:..................................................................................................................3
Discussion:...................................................................................................................3
Calculating the appropriate financial ratios of Halfords Plc for the period of four
years:............................................................................................................................3
Discussing the advantages and disadvantages of financial ratios:............................11
Discussing the source of finance of chosen company:..............................................12
Briefly discussing the report presented by the auditor:..............................................12
Conclusion:.................................................................................................................13
Appendix:....................................................................................................................14
References list:...........................................................................................................15
Student number:

3
ACCOUNTING
Introduction:
The report is prepared to evaluate the financial performance of a company
operating in the retail sector of the United Kingdom. Financial position of the
company is assessed for providing information about the customers, business and
suppliers to the investors seeking investment of amount £ 3 million. For the analysis
of the financial information, the chosen organization is Halfords Plc that is listed on
the London stock exchange. Halfords is the leading retailer of cycling, motoring and
leisure services and products of United Kingdom (Halfordscompany.com 2020). A
clear plan is adopted by the company that intends to drive the business towards long
term sustainable growth. The principal operation of the company is in the markets of
cycling and motoring. The motoring market generates more than half of the sales of
group and the remaining generated from cycling. The sales growth of Halfords has
been good because of improvement in the ranges of products introduced and new in
store services despite the challenging environment of business. In addition to this,
there was a growth in retail sales by 14% (Halfordscompany.com 2020). Increased
cost of labour and fluctuation in currency has adversely impacted the earnings of
business. The company rests on the policy of paying an increasing dividends to their
shareholders.
Discussion:
Calculating the appropriate financial ratios of Halfords Plc for the period of
four years:
In this section of the report, a detailed evaluation of the financial performance
of Halfords Plc over the time period of four years is demonstrated. The financial
performance of the company is assessed in terms of liquidity position, profitability
position, efficiency position and market performance using ratio analysis technique.
Ratio analysis helps in identifying the trend of the financial performance and
facilitates the comparison over a period of time and assist in the investment decision
making (Merkl et al. 2017).
Profitability ratios:
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