Financial Performance of Barratt Developments Plc

PRINCIPLES OF FINANCE

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Barratt Developments plc............................................................................................................1
Ratio Analysis .............................................................................................................................1
I ) Financial Performance of Barratt Developments Plc..............................................................4
II) Comparison of financial position of companies ....................................................................6
Trend analysis .................................................................................................................................7
Comment on the business from an investor’s point of view in terms of movements in ratios......11
Overall conclusions and recommendations for enhancing financial performance in future.........12
REFERENCES..............................................................................................................................13

INTRODUCTION
Financial reporting refers to the presentation of financial information in manner given
stated under the regulations. To assess whether the business has proved profitable or not during
the financial statements are prepared. These financial reports or statements include income
statement, balance sheet and cash flows statements (Aman, 2016). The performance of the
business can be analysed using the tool of ratio analysis. The report will include the analysis of
financial position and performance of the company during 4 years. The analysis will be done of
Barratt Developments plc as the host company of the house-holding industry. The comparison of
performance will be made with the competitor of the same industry that is Persimmon plc. Both
companies are serving the industry from many years. The report will be giving understanding
about the financial analysis of the statements of companies using appropriated ratios like
profitability, liquidity, activity and solvency. Report will also provide trend analysis on the
dynamic performance of the companies.
MAIN BODY
Barratt Developments plc
It is among the largest developer of residential properties in United Kingdom. Company
is operating over more than 30 divisions. Company is serving the house-holding industry since
62 years. It is a publicly listed company over the London stock exchange. The financial
statements of company show steady increase in level of revenues and profits. During the past
four years the earnings per share of the company have also increased. Financial position of
company is showing that the performance of company is appropriate. The company has paid
dividends during last four years. The share capital of the company is raising every year.
Company is excelling in he market with income of 671.5 millions against the revenues of 4874.8
million. Core business of company is house building and commercial construction through
Wilson Bowden Developments.
Ratio Analysis
Barratt Developments plc Persimmon plc
2018 2017 2016 2015 2018 2017 2016 2015
1

Liquidity
ratio
Current
assets 5726 5478 5235 4703 4215.7 4228.8 3661.7 3307
Current
liability 1548.2 1683.6 1588 1412 1123.9 1198.6 1014.5 930.5
Current
ratio 3.70 3.25 3.30 3.33 3.75 3.53 3.61 3.55
Current
assets /
current
liabilities
Current
assets 5726 5478 5235 4703 4215.7 4228.8 3661.7 3307
Inventory 4517 4475 4326 4173 3059.5 2825.9 2645 2645
Current
liability 1548.2 1683.6 1588 1412 1123.9 1198.6 1014.5 930.5
Liquid
ratio 0.78 0.60 0.57 0.38 1.03 1.17 1.00 0.71
Current
assets -
(stock +
prepaid
expenses)
Activity
ratio
Trade
Receivabl
es 226.8 204.5 149.6 158.8 91.8 86.1 103.7 91.5
Sales 4874.8 4650.2 4235.2 3759.5 3737.6 3597.8 3136.7 2901.7
Account
receivabl
e
turnover
ratio 4.65% 4.40% 3.53% 4.22% 2.46% 2.39% 3.31% 3.15%
Sales 4874.8 4650.2 4235.2 3759.5 3737.6 3597.8 3136.7 2901.7
Net
Assets 4597.7 4322.2 4010 3711 3194.5 3201.6 2737.4 2455.8
Asset
turnover
ratio 106.03% 107.59% 105.62% 101.31% 117.00% 112.38% 114.59% 118.16%
Sales /
2