logo

Project Report on Ratio Analysis - Next Plc and Hennes & Mauritz

   

Added on  2020-01-28

19 Pages3782 Words45 Views
ACCOUNTING AND FINANCE FORMANAGERS
Project Report on Ratio Analysis - Next Plc and Hennes & Mauritz_1
Table of ContentsINTRODUCTION......................................................................................................................3TASK 1 COMPARATIVE RATIO ANALYSIS.......................................................................3Non-financial ratios.............................................................................................................12Recommendations...............................................................................................................12Limitations of ratio analysis................................................................................................13TASK 2 Project evaluation techniques...................................................................................14Net cash flow.......................................................................................................................14Pay back period (PP)...........................................................................................................15Project Net Present Value....................................................................................................15Interpretation:......................................................................................................................16Project Accounting rate of return........................................................................................16Limitations of investment appraisal techniques..................................................................16CONCLUSION........................................................................................................................17REFERENCES.........................................................................................................................17
Project Report on Ratio Analysis - Next Plc and Hennes & Mauritz_2
INTRODUCTIONFinance is a crucial elements for all the business functions because no one can survivewithout having appropriate quantity of funds. In the present project report, two globalcompanies Next Plc and Hennes & Mauritz's financial performance will be analysed throughratio analysis. Worst performing company will be recommended through such evaluation andwell performing business will be selected by Asol Ltd for investment purpose. At the end,two capital projects available to Hilltop Ltd, should be evaluated through project evaluationtechniques. So that, best proposal can be identified which will be more viable and providemore benefits. TASK 1 COMPARATIVE RATIO ANALYSISFinancial strength: Liquidity refers to the ability to satisfy all the short-term business liability such asaccounts payables. Current ratio and quick ratio are two of the most important ratios thathelps to determine that how much companies are able to discharge their short-termobligations effectively and efficiently (Chaney, 2013). It has been selected to test the short-term payment ability. Suppliers who provide credit to the business mainly use this ratios toassess credit worthiness and secure their funds. Current ratio (CR): In Next Plc, the ratio is increasing consistently and comes to 1.82 in 2015 while, inH&M, it has been reduced to 2.11. Rising trend indicates that Next Plc increased its currentassets nearest to the idle industrial ratio which is 2:1. So that, firm will have enough resourcesto meet their current liabilities effectively and timely. On contrary, H&M's CR is greaterthan idle level but still, declined trend indicates that in future, it may goes beyond theacceptable level and impact liquidity position adversely. Firm 2015201420132012201120101.821.761.481.541.28N/AN/A2.112.252.662.712.96Next plcHennes & Mauritz
Project Report on Ratio Analysis - Next Plc and Hennes & Mauritz_3
Column chart:Bar chart:Quick ratio:This ratio has been selected to determine ability in absence of inventory. Next Plcratios has been improved from 0.72 to 1.16 whereas H&M has declined ratio to 1.07. Theratio is higher in Next Plc indicates high liquidity position as compare to H&M. But still, itmust be kept in mind that consistently increase in ratio also is a sign of inefficient uses hence,20102011201220132014201500.511.522.533.501.281.541.481.761.822.962.712.662.252.11020102011201220132014201500.511.522.533.501.281.541.481.761.822.962.712.662.252.110Firm 2015201420132012201120101.161.180.970.910.72N/AN/A1.071.221.491.692.06Next plcHennes & Mauritz
Project Report on Ratio Analysis - Next Plc and Hennes & Mauritz_4

End of preview

Want to access all the pages? Upload your documents or become a member.

Related Documents
Report On Asol Ltd & Next Plc Performance For Investment Decision
|16
|3811
|33

Assignment on Accounting and Finance of Hilltop Ltd
|20
|4429
|130

Strategic Decisions- Report
|20
|3753
|51

Accounting & Finance for Managers in Asol ltd : Report
|21
|4404
|46

Assignment on Accounting and finance - Next Plc And Hennes & Mauritz Company
|16
|3659
|165

Accounting and Finance Assignment : Next PLC
|13
|3607
|773