Finance for Decision Making

FINANCE FOR DECISION MAKING

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK1 ............................................................................................................................................1
Evaluation of financial performance of ......................................................................................1
TASK 2............................................................................................................................................1
Brief
description regarding investment appraisal of ............................................................................1
TASK 3............................................................................................................................................1
Brief description regarding potential acquisition of ...................................................................1
CONCLUSION................................................................................................................................1
REFRENCES...................................................................................................................................1

INTRODUCTION
Finance is defined as the term which is used as a source of income. It is circulated as blood
of any business corporation. Without managing of Finance no organization can able to
maintain their position within a competitive business environment. To understand the
concept of decision making regarding finance, Marks and Spencer group PLC has been
taken. This organization is situated in London. It is one of the most famous brand in the
retail sector of the UK this report has been defined uses of financial ratio for analyzing
business performance of Mark and Spencer. This report also included use of investment
appraisal techniques which help in taking decision regarding best alternative. They are
decided for use capital budgeting net present value technique for take decision regarding
acquisition investment. It also contains a usefulness of potential acquisition as the company
decide to run business with Ocado. Growing company and provides best platform for super
market through using online business platform. This will help Mark & Spenser to spread
their market share within competitive business environment. The main purpose of choosing
this organization as it become This report also contain its limitation and challenges faced by
Mark and Spencer if they take decision regarding acquisition of entity which belong from
the same sector.
TASK1
Evaluation of financial performance of Marks & Spencer Group PLC
Business organization to understand profitability and capability formulate a financial
statement through which they can interpret the financial position of their company to external as
well as internal stakeholders. Marks & Spencer Group PLC is one of the most famous brand
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names. By calculating essential ratio, the manager can able to recognize financial performance.
A Ratio is a part of financial management, which helps in taking decisions and useful in
comparison from other organizations (Ashraf, Rizwan, and L’Huillier, 2016).
Profitability of Marks & Spencer
Particular 2015 2016 2017 2018 2019
Net profit 777.36 613.77 153.81 34.1 43.98
Revenue 16640.53 15921.87 13886.14 14193.3 13623.32
Net profit
ratio =
= 4.67 3.85 1.10 0.24 0.32
Profitability of Ocado
2015 2016 2017 2018 2019
Net revenue 1,103.6 1,267. 1,454.5 1,598.8 1765
profit 371.1 431.3 495 547.5 591.8
Net profit
ratio =
4.56 5.6 5.8 5.15 6.7
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Interpretation: This ration helps in defining revenue recognition and effect of profitability on
business organization. Marks & Spencer’s net profit value had been declineing since 2015. The
main reason of change aeries within ratio is due to changes of economic business policies as well
as organization apply investment policies which directly impact on generating high rate of cash
outflow. The impact of Brexit agreement also become the main reason of changes within the
ratio of organization.The vvalue of the net profit ration is calculated 4.67 % in 2015 and in 2016,
the rate of the net profit decreases, 3.85, and it declines even after years. This indicates that the
organization not able to turn-out high rate of ration and them even not able to maintain revenue
position in the market. This showcase that Ocado able to generate more profit as compare to
Marks & Spencer, even this is a major organization and have wider business area.
Efficiency
Particular 2015 2016 2017 2018 2019
Stock 519.32 486.76 416.51 409.15 423.38
COOGS 10208.73 9694.51 8542.19 8823.74 13410.12
19.65 19.91 20.53 21.57 31.70
Efficiency of Ocado
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