External Sources of Finance and Financial Analysis of Dominos Plc

This report examines the external sources of finance available to Dominos Plc, including equity shares, debentures, term loans, preferred stocks, leasing, hire purchase, bank overdraft, trade credit facilities, factoring in debt, and venture capital. It also provides a financial analysis of Dominos Plc using various ratios such as cash ratio, liquid ratio, current ratio, gross profit margin, net profit margin, total assets to debt ratio, and shareholder's equity ratio. The report reviews recent media coverage of Dominos Plc and its impact on the share price and market capitalization, and analyzes the stock movements of Dominos Plc with a comparative study of FTSE index.

Dominos Plc

Contents
Introduction:........................................................................................................................................3
Main Body............................................................................................................................................3
Examine the external sources of finance that are available to Dominos Plc......................................3
Analysis and interpretation of Dominos Plc’s financial statements with the help of ratios:...............4
Review of recent media coverage of Dominos Plc and its impact on the share price and market
capitalization:....................................................................................................................................9
The stock movements of Dominos Plc and its comparative study with relevance to FTSE index. . .10
Conclusion...........................................................................................................................................12
References..........................................................................................................................................13

Introduction:
Dominos Plc is the UK Based food retail outlet. (John., 2021). The upcoming report
looks into the various types of finance sources that a business can use in order to raise funds.
Along with this it also includes the analysis and interpretation of financial records and events
by the calculation of ratios. In addition to this, it also highlights the news pointers that have
affected the share price and market capability of Dominos Plc. Furthermore, it also contains
the analytical data and theory for the stock price movement with respect to Russell group.
Main Body
Examine the external sources of finance that are available to Dominos Plc.
The word external source of capital recommend itself the nature of finance. Dominos
Plc. can raise income from outside origins like equity capital, preferred stock, loans, trade
credit, overdrafts etc.
The contemporary and external sources that are available to Dominos Plc are as follows:
 Equity Shares: A big company like Dominos Plc can opt for this method in order to
raise the funds. In this, the return is in the manner of dividend which is given to the
shareholders. The return arising from thus method is not tax deductible. Dominos Plc.
will have to undergo with so many legal procedure formalities to generate money
from this source. But it will be easy for Dominos Plc. as it holds a great goodwill and
so the investors have faith with this outlet. (John and John., 2021).
 Debentures: Dominos Plc can also use this to raise finance because it is the most used
method that a business uses in order to generate the finance. It is said to be the
cheaper mode when compared to equity (Wang, Feng, and Huan., 2021). It does not
involve high cost because the return is tax- deductible. Dominos Plc. can issue the
debentures to the common public. This issue includes some amount of cost.
 Term Loans: In this, Dominos Plc can borrow money from some banks or the
financial institutions. A brief analysis of a company’s fiscal is carried out and the
repaying potential of money in future of a business is checked before granting loans.
Dominos Plc can go for this as well because it has good financial records and gain
good amount of profit.
 Preferred stocks: It contains the features of both i.e., the equity stocks and debt. It is
known as preference share because the equity holders are given priority in it.
Dominos Plc will have to make them the payment first at the time of liquidity.

 Leasing and hire Purchase: Dominos Plc can choose any of them as the set of choices
between the delay in the cash payment for goods if supported by the suppliers which
is same as having the products funded. They both given an option to the owner of a
company to buy an asset when its term ends.
 Bank- overdraft: It is the short-term external source through which Dominos Plc. can
raise money. Bank – overdraft is mainly for the short- term financing that helps the
business enterprises to meet its day – to – day needs for money.
 Trade- credit facilities: Dominos can ask for the credit from its creditors and
suppliers. Lenders can help the organization to delay the payments for some time –
frame.
 Factoring in debt: In this Dominos Plc can sell its receivables on discounted rates. In
this the buyer can collect the money from the debtors in place of firm and can charge
some amount of premium for providing this kind of services.
 Venture Capital: It is the same source just like an equity share. But in this the
investors are the different group of people. In this the money is invested in new
business by doing the proper analyzation and observation of the financials.
Analysis and interpretation of Dominos Plc’s financial statements with the help of ratios:
Income statements: These are the records that states the expenses and income that a
company has occurred during the financial period. Financial Statements: These statements
reflect the financial position of company’s assets and liabilities.
 Following are the profit and loss account and statement of financial position of
Dominos Plc for 2021:
Income statement for accounting period 2021

Balance sheet for the financial year 2021

Above pictures reflects the fiscal reports of the Dominos Plc for the accounting period and
the analysis based on the records are given below:
 Cash Ratio: (Cash + Marketable securities) / Current liabilities
Therefore: Cash ratio= 490 / 591
CR = 0.83: 1
Generally, there is no ideal ratio for this, but if it is more than 0.5 than it is considered to be
good. So, from the above scenario the determined value is 0.83 that reflects the company is in
a good position to pay its short- term debts.
 Liquid ratio: Current Assets – stock / Liquid assets
Thus, L.R. = 861 – 68 / 591
L.R. = 1.34: 1
It is interpreted that the ratio derived is 1.34: 1. The ideal ratio is said to be 1:1 ratio. Hence it
is clear that the company has the potential to pay its short- term obligations without selling its
inventories and can handle its day -to - day operations in a smooth manner.
 Current ratio: Current assets / Current liabilities

So, C.R. = 861 / 591
C.R. = 1.45
The idea current ratio contains the value of 2: 1. Here, it is determined at 1.45:1 which does
not states that the company has stark financial position. But it can pay its debt and handle its
daily activities in an efficient and effective manner.
Overall, it can be assessed that the company has good and sound capability in terms of
liquidity and can stand in a long – run in market.
 Gross profit margin: It helps in evaluating the business’s financial health by
calculating the amount incurred in cost of goods sold by excluding it from sales
revenue.
Gross profit margin: (Gross profit / net sales) * 100
Thus, GP margin = (1688 / 4357) * 100
GPM = 38.74 %
It can be derived from the gross profit ratio that the company is making lot of expenses. As
the ideal GPR should be from 50 % - 70 %. But here it is evaluated at 38.74 % that means
Dominos Plc must take preventive actions to control the cost and spend less on the activities
that are not required.
Net Profit margin= It is derived by subtracting costs of goods sold, other expenses, tax and
income from revenue and dividing it by sales revenue then multiplying the figure by 100.
 Net profit margin = (R – COGS – E – I – T / Revenue) * 100
N.P.R = (4357 – 2669 – 708 – 192 – 118 / 4357) * 100
N.P. R= 11.7 %
Dominos Plc is a food- retail outlet, so in theses type of organizations the net profit margin is
observed at low rate because they the overhead cost in such business is very high.
Total assets to debt ratio = They are the leverage ratio that determines that total amount of
liabilities’ relative to the total assets owned by a company.
 TATD ratio= Short term debts + Long term debts / total Assets

Total assets to debt ratio = 5881 / 1672
Therefore, it is = 359.71 %
It shows that Dominos Plc has higher ratio and it is more leveraged. It is at more risk of
making the payments for its obligations and commitments. And it will harder for this
company to raise the debts.
Shareholder’s equity ratio = It reflects the amount of those assets on which the shareholders
of a business have a left -over claim.
 Shareholder’s equity ratio = Total shareholder’s equity / Total assets
SER= (4210 / 1672) * 100
Thus S.E.R = 251.79 %
This ratio indicates the warning to the Dominos Plc that it can face the financial distress as
the margin is very high which is not a good sign for a business. The reason behind this can be
that Dominos Plc might have spent all its retained earnings for acquiring any asset.
The Accounts receivable turnover ratio is calculated at 17.07. This is better for a business
because it indicates that the Dominos Plc has to receive money from its debtors in large
amount.
Review of recent media coverage of Dominos Plc and its impact on the share price and
market capitalization:
Dominos is a reputed and well – organized food-retail industries. But there is some news that
has influenced its image and reputation. The points are listed below:
 There is recent news on march regarding the data breach of Indian customers by
Dominos servers, this can have great influence on these two elements of share price
and market capitalization. Customers are the backbone of any business; the leakage of
sensitive data can lead to the decline in its sale. If the sales will decrease then the
people will think twice to buy the shares of this company (Sudol., Ochoa, and
Synovec., 2021)
 And if all this happens then the owners might even reduce the price of shares and
existing shareholders can even sell the shares because if the fall in company’s image
and reputation. So, this can affect the market capitalization and share price in an
adverse manner which can result co

 Another news is that CEO has resigned due to the decrease in Q4 sales, Chief
Executive Officer of Dominos Plc has left Dominos because there the quarterly sales
at the end that is in the month of October, November and December have been
decreased. Aforesaid, the decline in revenue states clearly that it will be tough in the
future to maintain its operations, shareholders and company might even face loss. If
the CEO himself has given the resign then it means the company is already losing its
share and market capitalization. The reason for same can be that there are many
competitors in this sector who are playing their best to achieve the share. Another
reason can be that the company has already lost the support of its shareholders and
stakeholders.
The two points mentioned before were in news in the month of march and it is observed that
the Dominos Plc is facing lot of rivalry in the market and these two pointers also concludes
that the company might face issues to make its space in a market for long - run.
The stock movements of Dominos Plc and its comparative study with relevance to FTSE
index
Before heading to the further discussion understanding the meaning of FTSE and
share price movements and predictions behind them is really necessary.
Share price movements: The variations in the prices of stocks that happens due to the market
forces. The cause of change in the stock prices is due to the fluctuations in demand and
supply. If public demands for the stock and then sells it, then the price goes high. There are
certain indications that projects such fluctuations in the prices.
 Increase and decrease in the holdings of mutual funds.
 Impact of Foreign Portfolio investors and foreign institutional investors on stock price
movement.
 Percentage of delivery in stock trading volume.
 Increase and decrease in promoters holding.
 Change in the business model
FTSE stands for financial times stock exchange, and now it is known as Russell group, it is
the British Financial organization that deals in giving indices offerings. (Kumar and Kumara.,
2021).

The graph presented beyond is taken from the reliable source. The data presents the
movements in stock prices of Dominos Plc. By the graph it is observed that the price of the
shares has been declining in the month of April (Majanga., 2018). At the starting of this
month, the share prices were more as compared to 25 April 2022. On 25 April 2022, a 0.7 %
rise in the FTSE 100 to 7188 can be good news for the investors. The reason behind such
fluctuations can be the increase or decrease in demand. And also due to the certain news
points Dominos had great influence on its image. There is an increase on 25 April 2022, but
with a very little percentage.
FTSE indices of its competitor McDonalds:
McDonalds is the largest restaurant in the world. It is many chains by revenue and serves
over large no. of customers.

As the above data represents that there are many fluctuations in the stock price movements
that prices for the same are decreasing and increasing each day. At the starting of April
month, the prices of its share were very low and were on the peak on April 22, 2022. The
price variation is of 2-5. For the day 26 April, 2022 the prices have been decreased a lot, this
might be due to the variations in promotions holding and rate of delivery in stock trading
volume.

Conclusion
So, it can be concluded that it is very important for any company to operate by
making less expenses and maintain its image in the eyes of its stakeholders and shareholders.
With this, it also clarifies how the data is taken from the balance sheet to evaluate and
examine the ratios that states the financial health of business enterprise.

References
Books and Journals
John, A., 2021. To Study the Conceptual Framework on Consumer Satisfaction with Special
Refrence to Domino’s. Asian Journal of Management. 12(4). pp.523-526.
John, A. and John, B., 2021. To Study the Consumer Satisfaction in Consuming the Fast
Food Products With Special Reference To Domino’S. Asian Journal of
Management. 12(4). pp.519-522.
Wang, Y.C., Feng, Z.Y. and Huang, H.W., 2021. Corporate carbon dioxide emissions and the
cost of debt financing: Evidence from the global tourism industry. International
Journal of Tourism Research. 23(1). pp.56-69.
Torkashvand, M., Neshat, A., Javadi, S. and Yousefi, H., 2021. DRASTIC framework
improvement using stepwise weight assessment ratio analysis (SWARA) and
combination of genetic algorithm and entropy. Environmental Science and Pollution
Research, 28(34). pp.46704-46724.
Sudol, P.E., Ochoa, G.S. and Synovec, R.E., 2021. Investigation of the limit of discovery
using tile-based Fisher ratio analysis with comprehensive two-dimensional gas
chromatography time-of-flight mass spectrometry. Journal of Chromatography A.
1644. p.462092.
Kumar, M.P. and Kumara, N.M., 2021. Market capitalization: Pre and post COVID-19
analysis. Materials Today: Proceedings. 37. pp.2553-2557.
Majanga, B.B., 2018. Corporate CAPEX and market capitalization of firms on Malawi stock
exchange: an empirical study. Journal of Financial Reporting and Accounting.
Biktimirov, E.N. and Afego, P.N., 2022. Do investors value environmental sustainability?
Evidence from the FTSE Environmental Opportunities 100 index. Finance Research
Letters. 44. p.102112.
Santis, S., Grossi, G. and Bisogno, M., 2018. SOURCES OF FINANCE AND THEIR ROLE
ON SMALL BUSINESS SUCCESS IN JORDAN. Academy of Entrepreneurship
Journal. 27(1). pp.1-13.Journal of Public Budgeting, Accounting & Financial
Management.