Assignment - Company's Analysis Report Kingfisher Plc
Added on 2020-10-23
22 Pages5469 Words194 Views
COMPANY’S ANALYSIS
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1HORIZONTAL ANALYSIS...........................................................................................................2VERTICAL ANALYSIS...............................................................................................................10RATIO ANALYSIS.......................................................................................................................16CONCLUSION..............................................................................................................................19REFERENCES..............................................................................................................................20
INTRODUCTIONFinancial accounting is a process which is very important for any organization to have. Thishelps in managing their financial information. It is a method that involves reporting,summarizing all the transactions which is being operated in the business by the company. Thesetransactions are then presented as financial statements which has its balance sheet, cash flowstatement, income statement, etc. which helps in keeping up the records of company for futureuse. Present report will talk about Kingfisher Plc which is top retail company operating theirbusiness in London, United Kingdom and its corporate objectives which they have to achieve inthe future. It will also explain about the financial statements and its related information which isuseful for them. This report will also discuss about vertical and horizontal analysis for KingfisherPlc. In the end it will discuss about company's overall performance with respect to itscompetitors, i.e., Ferguson Plc.COMPANY BACKGROUNDKingfisher Plc is a British multinational corporations which one of the largest retail industrythat is operating its business worldwide. It is headquartered in London, United Kingdom, withregional offices located across the United Kingdom and Republic of Ireland. Company hasapprox 1,300 stores located at different locations. It is a public limited company founded in year1982. It offers variety of products which ranges from home improvement items, for example,home appliances, tools for home furnishing, garden suppliers and plants, etc. It has approx78,000 workers working with them which makes them to work more effectively for organization(Company Overview of Kingfisher plc, 2018). In addition, the company offers propertyinvestment, finance, digital, sourcing, and IT services. They provide their products to theircustomers through both the channels, i.e., online and offline stores. The estimated sale ofcompany in the year 2018 was reported around £11.7 billion, with underlying pre-tax profits of£797 million.Ferguson Plc which is their top competitor is also operating their business in Reading,Berkshire, United kingdom. It is a multinational building material distribution company. It hasapproximately 50,000 employees working with them in 25 different countries. Their net revenueis estimated up to £995 million. In 2017, they have changed their name from Wolseley toFerguson, to reflect the United States being the predominant market (Ferguson plc Information,2018).1
HORIZONTAL ANALYSISHorizontal analysis is also known as trend analysis which is a financial statement analysistechnique helps to show changes in the amount of corresponding items related to the financialstatements over a period effectively. Horizontal analysis is a useful tool that it helps to determinethe trend situation. Statements which are related to two or more periods are used in trendanalysis. The earliest period is usually used as the base period and the items on the statements forall later periods are compared with items on the statements of the base period. There are differentexamples of the trend analysis such as balance sheet, income statement, retained earnings'statement and schedule of fixed and current assets. Changes in income statement and balancesheet in a horizontal analysis are computed in percentage and dollars and also compared with theexpected changes effectively. Combination of financial ratios is used to determine strength andweaknesses of a company.Common size Income statement of Kingfisher PLCParticulars2015% of Sales2016% of Sales2017% ofSalesRevenue10966100.00%10441100.00%11225100.00%Cost of goodsmanufactured691863.09%654562.69%705062.81%Gross Profit404836.91%389637.31%417537.19%Selling andadministrativeexpenses340331.03%323330.96%344530.69%UnusualExpense(Income)380.35%1661.59%-17-0.15%OtherOperatingExpenses-40-0.36%-26-0.25%-19-0.17%Total1031494.05%991594.96%1045893.17%2
OperatingExpensesOperatingprofit6525.95%5265.04%7676.83%Other, Net-4-0.04%10.01%10.01%EBIT6445.87%5124.90%7596.76%Income taxprovision710.65%1000.96%1491.33%Net IncomeBefore Extra.Items5735.23%4123.95%6105.43%Net Income5735.23%4123.95%6105.43%Interpretation: The revenue of Kingfisher PLC was 10966 in 2015 which decrease in theyear 2016 by 10441 and also increased in 2017 to 11225. Thus, in the 2016 year the firmrevenues decrease up to -4.79%. The cost of goods manufactured in 2015 was 6918 whichdecreases in the year 2016 by 6545 and also increased in 2017 to 7050. The gross profit in 2015was 4048 which decreases in 2016 by 3896 and increased in 2017 up to 4175. The changepercentage in 7.16%. Thus, the profit is increased for the firm in the year 2017. In addition tothis, selling and administrative expenses was 3403 in 2015 which decreases in the year 2016 by3233. It is increased in the year 2017 to 3445 that percentage change rate is 6.56%. Unusualexpenses was 38 in the year 2015 which is increased in the year 2016 to 166 and decrease in2017 by -17 effectively. The operating expenses was -40 in the year 2015 which decreases to -26in the year 2016 and -19 in the year 2017. Operating profit is calculated 652 in the year 2015which increased in the year 2016 by 526 and in the year 2017 as well to 767. Net income iscalculated 573 in the year 2015 which decreases to 412 in the year 2016 and increased in the year2017 to 610. Thus, 2017 is the profitable year for firm.FERGUSON PLC3
USD in Million except per share data2015% of sales2016% of sales2017% of sales4
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