Business Finance Case Study: Analyzing R plc Performance with Ratio Analysis

Business Finance Case
Study

Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK ..............................................................................................................................................3
Calculate and comment on the ratios of R plc............................................................................3
CONCLUSION ...............................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
Financial tools are the techniques that used by organisations to analyse the performance
of their business. They help the firms in taking various decisions for improving the health of
their entity. There are various methods of examining the financial information such as trend
analysis, changes in cash flow statement, horizontal and vertical analysis and many more
(Quagliarini, Maracchini and Clementi, 2017). The report is based on R plc. It deals in
manufacturing and distribution of Sports events DVD recordings. The report is based on
analysing the performance of R plc with the help of ratio analysis and compares it with S plc
results. It also discusses about the limitations of application of this technique.
TASK
Calculate and comment on the ratios of R plc.
Accounting ratio refers to the tool of creating relationship among the different values of
balance sheet and income statement (Noor and et.al., 2018). This data aids the organisation in
developing information about the business and also it can be used for conducting comparison
analysis with competitors or with its last year results. Here are the ratios of R plc.
Ratios R plc S plc
Profitability
Gross profit margin:
[GP / Sales] x 100
[10880/26245] x100 =
41.45 %
[or 41% or 41.5%] 38%
Operating profit margin:
[Operating profit/Sales] x 100
[5313 /26245] x 100 =
20.24% 18%
ROCE (company):
Operating profit/ (shareholders’ funds + long term
loans)] x 100
[5313 / 26245)] x 100
= 20.24%
25%
Liquidity