Performance Evaluation of T plc: A Business Finance Analysis

Business finance

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Profitability.................................................................................................................................3
Liquidity......................................................................................................................................3
Working capital management.....................................................................................................4
Stock market performance..........................................................................................................4
Justification for investment.........................................................................................................4
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
Finance is the amount of money which is necessary for the company in order to manage
and run the business in successful manner. For any business to get successful, appropriate use of
finance is necessary. The present study will outline the discussion of performance of T plc with
help of evaluating its performance on basis of different ratios and industry averages.
MAIN BODY
Profitability
For analysing the success of the company, the most essential aspect is the analysis of the
profitability of business. this is pertaining to the fact that when company will be profitable then
only they will get successful. With the analysis of the data provided, it is clear that company is
having a constant gross profit margin that is 39 % and 40 %. On the other side, the industry
average of gross profit margin is 37 %. Hence, in comparison with the industry average, T plc is
working good as they are having 40 % gross profit margin which is good for company. on the
other hand, on basis of net profit margin as well, it can be stated that company is performing very
well in comparison to industry average (Paun, 2017). This is particularly because of the reason
that the industry average for net profit is 4 % and company is having 5.8, 5.9 and 6.05 % for
2018, 2019 and 2020 respectively. This fact outlines that the net profit margin of the company is
above industry average. With this it can be articulated that company is performing good in
comparison to other companies within the industry.
Liquidity
Along with profitability it is very essential for T plc to maintain good liquidity as well for
managing the operations of company. the liquidity is the capability of company to convert their
current asset into cash very frequently. With the analysis it was seen that company is not having
good liquidity. This is particularly because of the reason that in accordance to industry standard,
current ratio is 1.05:1 but the company is not having good ratio that is 0.8:1. This simply means
that company is not even having a single asset to pay off a single liability (Sutarno and et.al.,
2019). Similarly, with respect to quick ratio the performance is nearby the industry standard.
This is pertaining to the fact that industry standard is 0.5:1 and in actual company is having 0.4:1
which is slightly less than the standard. But overall it can be evaluated that liquidity of company
is little less in comparison to the industry standards.