Retail Company Financial Analysis

This assignment presents a comparative analysis of the financial performance of two prominent British retail companies: Debenhams Plc and Marks & Spencer Plc. The analysis utilizes several key stock market performance ratios to evaluate their profitability, dividend policies, and market valuations. These ratios include Earnings Per Share (EPS), Dividend Yield, Dividend Payout Ratio, and Price-to-Earnings (P/E) ratio. Data for these ratios is provided for the years 2012 to 2016, enabling a trend analysis of each company's financial health.

Financial Analysis and Management 1
Financial Analysis and Management

Financial Analysis and Management 2
Table of Contents
Introduction......................................................................................................................................3
A) Back ground of the company and its position in front of its rivals............................................3
B) Ratio Analysis of Five years.......................................................................................................5
C) Strategic and Operational issues...............................................................................................15
Conclusion.....................................................................................................................................17
References......................................................................................................................................18
Appendices....................................................................................................................................22

Financial Analysis and Management 3
Introduction
The objective of the report is to analyses the financial performance of the company namely
Debenhams Plc and its competitor. This report is divided into three tasks i.e. background of the
company, five year financial performance of the companies through ratio analysis and strategic
and operational issues of the company that influences the operations of the business. Ratio
analyses of the company analyze the performance of the company and its position in front of its
rivals.
A) Back ground of the company and its position in front of its rivals.
Debenhams plc is a leading British Multinational retail company started under the format of
departmental store in UK and Ireland. It has also different stores in different countries The first
store of the company is in London which has founded in 18th century and now the company ahs
the 178 locations across the UK, Denmark and Ireland. It is the public company listed in London
Stock Exchange (LSE).the current employees are 27,187.The company appointed the new
Director namely Mr David Adams in October 2017.Debenhams has the unique position in the
fashion accessories of all the ages and genders from more than two centuries (Debenhams,
2017). The company runs its 160 mid size departmental stores in the UK and deals in women,
kids and men’s apparel, cosmetics, electrical, house ware and toys. The leading brands of the
company are Debut, Red Herring and New England about 70% of its total sales. The company
also offers a weeding registry and inbuilt stores and restaurants. Apart from UK the company
opened its 7-0 stores at global level which includes the countries like Bahrain, Turkey and
Indonesia and company also has 15 stores which is owned and located in Ireland and Denmark.

Financial Analysis and Management 4
The company also runs its online business in the name of Debenhams Direct (Morning star,
2017).
The Debenhams Plc rivals are John Lewis Partnership Plc, Marks and Spencer Group Plc and
House of Fraser Limited.The3 position of the company against these competitors are lag behind
in some of its areas. In the below given figure it is identified that company lags behind in some
of the areas. In the below given table the position of the competitors are listed according to the
financial performance of the business. It can be identified that net income and market
capitalization is low as compared to its key competitors like Mark and Spencer and other groups.
Similarly, the interest coverage rate is high as compared to its competitors.
(Source: Morningstar, 2017)

Financial Analysis and Management 5
The position of the company is behind as compared to its strong competitors in the market. The
presence of many retail stores makes the market share is low. The company’s brand is not into all
types of customer segments and limited global geographic presence (Financial Times, 2017). As
compared to industry average the position of the company is not good which is clearly indicated
in the above given figure.
B) Ratio Analysis of Five years
Ratio Analysis is an important part to analyse the company’s financial performance. Accounting
ratios are important to analyses the financial position of the company. It gives important
information to its users like investors, bankers and creditors. It analyses the profitability,
efficiency and comparing performance of the company with its historical trends to identify the
loopholes in the business. Below given ratios calculates the performance of the company and
compare with its competitor namely Marks and Spencer Plc.
Profitability ratios
Profitability ratio assesses the profits of the company and it evaluates the capacity of the
company to earn profits. The Profit refers that the amount which is left after excluding of all
costs and overheads from the income. There are different kinds of ratios which assess the
profitability position of the both the companies that includes return on assets ratio, gross profit
margin ratio, return on assets, operating margin, return on sales and return on equity. Gross
margin is helpful for the company to identify the profitability of the company’s goods and
services. Three key ratios can be taken to evaluate the performance of the business i.e. Gross
Profit margin, Return on Assets and Return on Equity. Return on assets is a financial ratio that
indicates the portion of profit in the form of percentage of the company generates on its assets

Financial Analysis and Management 6
(Higgins, 2012). It is an important ratio that evaluates the company’s earnings on it’s per dollar
of its assets. Lastly, the return on equity is also the best indicator of the company to assess the
profits. It is an important ratio for the equity holders as they get the returns in a variable manner.
For this reason this ratio is important for the investors to know their returns in a long run. Below
given table indicated the profitability ratio of 5 years of both the companies.
Profitability Ratio of Debenhams Plc
Profitabilit
y Ratio
2016 2015 2014 2013 2012
Gross profit
ratio
12.51 12.8 12.06 13.5 13.5
Return on
Assets
3.9 4.3 4.05 6.0 5.9
Return on
equity
0.09 0.11 0.11 0.17 0.18
(Source: Yahoo Finance, 2017)
Profitability Ratio of Mark and Spencer Group Plc
Profitabilit
y Ratio
2016 2015 2014 2013 2012
Gross profit
ratio
39.11 38.65 37.5 37.8 6.62
Return on
Assets
4.9 5.7 6.4 5.9 6.1

Financial Analysis and Management 7
ROE 0.11 0.15 0.19 0.18 0.18
It is identified from the results of the table of the profitability ratio analysis the company’s
profitability is moderate as compared to its previous years. Similarly, the performance of its peer
group namely Mark and Spencer which performs better in its 5 year period. The profitability
position of its rival is good and it generates good profits in these years. The company’s
profitability is low due to increase in cost of goods and poor pricing strategies that will influence
the position of the company’s financial performance (Market Watch, 2017). Moreover, the
company’s debt is high so that it influences the profitability of the company. The company needs
to set effective pricing and sales strategies to generate sufficient profits and maintain its position
in the long run.
Liquidity Ratios
It assesses the capacity of the company to pay its debts in the long run. From this ratio, company
can assess its capacity to pay its short term debts. It can be computed through two different
methods i.e. current ratio and quick ratio. Liquidity ratio measures the capacity of the company
to pay its debts and calculates the margin of safety through different methods (Guru Focus,
2017). Current liabilities are measure the importance of current assets to assess the company’s
debts at the time of emergency. This ratio is helpful for the financial managers to evaluate the
issues regarding going concern and cash flow positioning of the business. It is also helpful for
the company to compare the financial results of the company with its previous years to analyze
the liquidity position of the company. Below given table indicated the liquidity ratio of the both
the companies to analyses the solvency position of the company with its previous years (Vogel,

Financial Analysis and Management 8
2014). Below given table indicated the liquidity ratio of both the companies to analyze the
solvency position of the company with its previous years.
Liquidity ratio of Debenhams Plc
Liquidity
Ratios
2016 2015 2014 2013 2012
C R 0.73 0.66 0.64 0.63 0.63
Q R 0.18 0.11 0.12 0.07 0.10
(Source: Healy and Palepu, 2012)
Liquidity ratio of Marks and Spencer Plc
Liquidity
Ratios
2016 2015 2014 2013 2012
C R 0.69 0.68 0.58 0.56 0.56
Q R 0.24 0.24 0.16 0.17 0.18
(Source: Fridson and Alvarez, 2011)
In the above given table it is indicated that liquidity position of the company is god as compared
to its competitor. Moreover, it is also identified that the trend of the company towards upwards
according to the previous years. The reason behind this upward trend is the good liquidity
position and the average collection period of the company is good and the management
effectively received their payments in good time limits so that it maintains the liquidity position
of the company (David, 2011). The company needs to maintain this position by framing effective

Financial Analysis and Management 9
credit policies so that the capital of the company is not hampers at the time of the payment of
short term debts. Similarly, quick ratio of the company is also improved as compare to its
previous years. As compared to its rival the quick ratio of the company is low. The company
needs to improve its liquidity position of the company to meets short term debts. If the company
cannot meet its present obligations and debt its existence and survival becomes doubtful and all
other measures related to the company becomes secondary if not completely irrelevant (Brigham
and Ehrhardt, 2013).
Gearing ratios
The gearing ratio measures the relationship between the company’s debts to its equity. It
measures the financial risk of the company is subjected, High debt results the financial
challenges. High gearing ratio indicates the level of debt and equity is at high proportionate level
and low gearing ratio depicts the low portion of debts to equity level. It represents the leverage of
the company where company can continue its daily operations by using its debts. At the time of
downturn or crisis in the business, companies have the trouble to meet its debts payments that
will cause the higher financial risk or bankruptcy (Brigham and Houston, 2012). The situation
become critical when the company lend the money on volatile rate of interest and sudden growth
in interest rates leads to failure of interest payments.
A high gearing ratio is not favorable for the company as it is the risk of payments of debts on
time. A low gearing ratio is a good indicator of effective financial management. The most
effective method to calculate gearing ratio is to add all types of debts like long term debts, short
debts and bank overdraft by shareholder’s equity (Usman and Khan, 2012). It is computed by
earnings before interest and taxes by interest payable. The higher the interest coverage ratio is

Financial Analysis and Management 10
good for creditors. Below given table indicated the results of the gearing ratio of the company of
five years which represents the degree of leverage.
Gearing Ratio of Debenhams Plc
Ratios Formulas 2016 2015 2014 2013 2012
Gearing
ratio
Long Term
debt/Shareholder
funds
0.22 0.23 0.28 0.31 0.37
Interest
coverage
ratio
EBIT/Operating
Profit/Interest
Expense
8.5 7.8 9.2 15.27 14.5
(Source: Paradi, Rouatt and Zhu, 2011)
Gearing ratio of Marks and Spencer Plc
S. No Ratios 2016 2015 2014 2013 2012
Gearing
ratio
Long term
debt/Shareholder
funds
0.50 0.53 0.59 0.66 0.66
Interest
coverage
ratio
EBIT or
Operating
Profit/Interest
Expense
5.09 6.2 4.9 5.3 5.5

Financial Analysis and Management 11
(Source: Kar, Nazlıoğlu, and Ağır, 2011)
As per the above given table it is indicated that company’s gearing ratio is low in the year 2016
as compared to its previous years. It indicates that company’s debts are less proportionate to its
equity. Low gearing ratio is good for company which represents the good financial stability. The
trend of the company is good as the company maintain its debts with equity in these years. In
2012 the ratio of the company is high but later on it decreases that indicates the company
effectively uses its debts to increase value for its shareholders (Rao, 2011). As compared to its
rivals the gearing ratio of the company is low and the interest payment capacity is good as
compared to its competitor in its previous years. It means that the company sufficiently pays its
interest before tax and interest for a time period (Chandra, 2011). The gearing ratio of the
company is better than its competitor according to the given results in the table.
Efficiency Ratios
This ratio measures that how company uses its assets and liabilities effectively. Efficiency
calculates the receivables turnover, repayment of liabilities and use of inventory and machinery.
From these ratios company measure how effectively business uses its assets to generate revenues
and ability to manage those assets. Below given table indicated the three ratios which determines
the efficiency of the company in the long run i.e. inventory turnover ratio, accounts turnover
ratio and assets turnover ratios (Tugas, 2012).
Efficiency ratio of Debenhams Plc
S. No 2012 2013 2014 2015 2016
Inventory
Turnover
6.1 5.6 5.8 5.9 5.9

Financial Analysis and Management 12
ratio
Accounts
receivable
turnover
96.9 108.6 85.6 82.9 75.5
Fixed asset
turnover
ratio
2.1 2.1 2.3 2.4 2.5
(Source: Schoenebeck and Holtzman, 2013)
Efficiency ratio of Mark and Spencer Plc
S. No 2012 2013 2014 2015 2016
Inventory
Turnover
ratio
8.2 8.1 7.6 7.9 8.0
Accounts
receivable
turnover
74.2 71.1 56.9 58.2 62.8

Financial Analysis and Management 13
Fixed asset
turnover
ratio
5.0 4.9 5.5 6.0 7.03
(Source: Xu, et al., 2014)
It can be identified from the above table the inventory turnover ratio of the company is stable as
compared to its previous years it means that company effectively converted its inventories into
sales. The performance of the competitor is better than the company it can be identified from the
trend of the both the companies the competitor namely Mark and Spencer Plc effectively convert
its inventory into sales. Similarly, the accounts receivable turnover ratio is also high as compared
to its previous years which indicate that company cannot collect the money from its debtors in a
timely manner or the company can take a long time to collect its money from debtors. Similarly,
the performance of the company is not better as compared to its competitor (Ongore and Kusa,
2013). The competitor’s ratio is good and it collects the receivables in a timely manner from
debtors.
Stock Market Performance Ratios
It is an important ratio for the investors to assess the market position of the company on the basis
of key important ratios. These ratios are helpful for the investors regarding dividends and profits
payout to its earnings of the investors in the current period of time and long time. Four key ratios
are calculated in the below given table of both the companies.
Stock Market Performance ratios of Debenhams Plc
S. No Ratios 2016 2015 2014 2013 2012

Financial Analysis and Management 14
1 Earnings Per Share
Ratio (EPS)
0.07 0.07 0.07 0.09 0.1
2 Dividend yield 5.9 4.64 4.52 4.66 2.89
3 Dividend
payout ratio
43 46 39 33 30.6
4 Price Earnings
ratio (P/E
ratio)
8.71 10 9.3 11.63 9.9
(Source: Maricica and Georgeta, 2012)
Stock Market Performance ratios of Marks and Spencer Plc
S.N
O Ratios
2016
(In
GBP
Million
s)
2015
(In
GBP
Million
s)
2014
(In
GBP
Million
s)
2013 (In
GBP
Millions)
2012 (In GBP
Millions)
1
Earnin
gs per
Share
ratio 0.49 0.59 0.64 0.56 0.64
2
Dividen
d Yield 6.8 4.17 3.78 3.71 1.61
3 Dividen 68.5 52.2 51.7 18.4 26.2

Financial Analysis and Management 15
d
payout
ratio
4
Price
earning
s ratio
P/E
Ratio 16.37 18.14 14.04 13.83 12.9
As per the above table, it is indicated that stock performance ratio of the company is increased in
its previous years (Dividend yield and payout ratio) which indicates that Debenhams earns
sufficient income so that it can pay the reasonable profits to the investors. The trend of the
payout ratio is instable in some years but it maintained the ratio of payouts that is profitable for
investors. Similarly, EPS of the Debenhams is not stable as it is increased or decreased in its
previous years. It indicates that company earned better in most of the years and it is the reliable
company to invest in. On the other side as compare to its competitor the performance of the
company is not good (Wahlen and Wieland, 2011). Marks and Spencer provides good returns
and payout to its shareholders. The good performance of the company indicates that the company
invests in the good projects and the goodwill of the company is better so that it generated the
sufficient profits and returns on its projects.

Financial Analysis and Management 16
C) Strategic and Operational issues
It has identified from the financial performances of the company there are five main issues which
hampers the growth of the company. As per the chairman statement and company’s reports it is
revealed that company’s lags behind these issues.
1) Cost Factor is High: It can be identified from the performance of the company in the above
ratio analysis the company’s cost is increases due to large number of stores into the long time
lease period. So the management faces the difficulties to close the stores which are of long term
lease. Lengthy and expensive leases are the reason for the fall of profitability of the business
(David, 2011). The management should strategic plan to reduce the cost of the business by shut
down their non profitable outlets and invests in the expansion of the existing outlets of the
company which gives the profitable returns to the company.
2) Product development: This is also an major issue faces by the company to cut down its
operating profits as compared to its competitor namely Marks and Spencer. Product development
means changes in the infrastructure of the stores and product lines are the good strategy of the
companies to generate good profits. The company should develop its stores on the basis of new
themes and infrastructure so that it attracts the customers well. The company should introduce its
own specialize products in the market that will increase the performance and footfalls of the
project (Czinkota, Ronkainen and Moffett, 2011). As per the statement of the top executives of
the company namely Richard Chamberlain analyst at RBC capital markets said “Company strong
in beauty and cosmetics and they’re the market leader in occasion wear”.
3) Online competition: The e-commerce concept of the business can churn the profits of the
many companies. The company effectively tied up with e commerce giants and sells its products.

Financial Analysis and Management 17
The company needs to adopt the online internet and mobile strategy to increase its
underperforming products. It has been identified from the sources of the company the online
revenues of the company is grown by 9% and accounted for 15% of group sales. The competitor
report revealed that 35% of the sales were made online, that indicates that Debenhams has plenty
of room to grow its ecommerce business.
4) Labour scheduling and hiring: This issue is takes lots of time normally. The company hires
the labour in its stores according to the latest regulations like labour union act and employment
act. Changes in regulations will affect the demand and supply factors of the labour capital that
will increase the cost of the company (Ameer and Othman, 2012). The company can avoid this
issue by forecasting the proper labour planning according to the demand of the company and
company should follow the compliance and regulations effectively that will helps the
management to save million dollars of fines and legal suits.
5) New Technology: Advanced technology also the boon or bane for the company in the
hardcore competition in the retail industry. The company needs to focus on the advanced
technology to capture major markets and analyze the latest trends of the consumers. Big data
analytics is helpful for the company to evaluate the changing trends of the consumers which
helps company to stay competitive in the market and generates effective revenues in the long run
(Sanjeev and Jauhari, 2012). Changes in technological factors affect the strategies of the business
and its operations.

Financial Analysis and Management 18
Conclusion
As per the above report, it is identified that Debenhams position is growing in the retail industry.
Moreover, it also concludes n the ratio analysis, the efficiency and gearing ratios of the company
is improved as compared to its previous years. The performance of the competitor is better as
compared to the Debenhams. Lastly, it also concludes that strategic and operational issues
influence the performance of the business performance in the long run.

Financial Analysis and Management 19
References
Ameer, R. and Othman, R. (2012) Sustainability practices and corporate financial performance:
A study based on the top global corporations. Journal of Business Ethics, 108(1), pp.61-79.
Brigham, E.F. and Ehrhardt, M.C. (2013) Financial management: Theory & practice. UK:
Cengage Learning.
Brigham, E.F. and Houston, J.F. (2012) Fundamentals of financial management.UK: Cengage
Learning.
Chandra, P. (2011) Financial management.USA: Tata McGraw-Hill Education.
Czinkota, M., Ronkainen, I.A. and Moffett, M.H. (2011) International business.USA: Wiley.
David, F.R. (2011) Strategic management: Concepts and cases.UK: Peaeson/Prentice Hall.
David, F.R. (2011) Strategic management: Concepts and cases.UK: Pearson/Prentice Hall.
Debenhams (2017) Company Information.[Online].Available at:
http://www.debenhams.com/content/company-information# (Accessed: 27th October 2017)
Financial Times (2017) Debenhams PLC.[Online].Available at:
https://markets.ft.com/data/equities/tearsheet/financials?s=DEB:LSE (Accessed: 27th October
2017)
Fridson, M.S. and Alvarez, F. (2011) Financial statement analysis: a practitioner's guide (Vol.
597).USA: John Wiley & Sons.

Financial Analysis and Management 20
Guru Focus (2017) Debenhams PLC. [Online].Available at:
https://www.gurufocus.com/term/pettm/DBHSY/PE-Ratio/Debenhams%20PLC (Accessed: 27th
October 2017)
Healy, P.M. and Palepu, K.G., (2012) Business analysis valuation: Using financial
statements.UK Cengage Learning.
Higgins, R.C. (2012) Analysis for financial management.USA: McGraw-Hill/Irwin.
Kar, M., Nazlıoğlu, Ş. and Ağır, H. (2011) Financial development and economic growth nexus in
the MENA countries: Bootstrap panel granger causality analysis. Economic modelling, 28(1),
pp.685-693.
Maricica, M. and Georgeta, V. (2012) Business failure risk analysis using financial
ratios. Procedia-Social and Behavioral Sciences, 62, pp.728-732.
Market Watch (2017) Debenhams PLC.[Online].Available at:
https://www.marketwatch.com/investing/stock/deb/profile?countrycode=uk (Accessed: 27th
October 2017)
Morning star (2017) Debenhams Plc.[Online].Available at:
http://financials.morningstar.com/ratios/r.html?t=DEB&region=gbr&culture=en-US (Accessed:
27th October 2017)
Morning Star (2017) Marks & Spencer Group PLC. [Online].Available at:
http://financials.morningstar.com/valuation/price-ratio.html?
t=MAKSY&region=usa&culture=en-US (Accessed: 27th October 2017)

Financial Analysis and Management 21
Ongore, V.O. and Kusa, G.B. (2013) Determinants of financial performance of commercial
banks in Kenya. International Journal of Economics and Financial Issues, 3(1), p.237.
Paradi, J.C., Rouatt, S. and Zhu, H. (2011) Two-stage evaluation of bank branch efficiency using
data envelopment analysis. Omega, 39(1), pp.99-109.
Rao, P.M. (2011) Financial Statement Analysis and Reporting. Eastern Economic Edition, PHI
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Financial Analysis and Management 22
Xu, W., Xiao, Z., Dang, X., Yang, D. and Yang, X. (2014) Financial ratio selection for business
failure prediction using soft set theory. Knowledge-Based Systems, 63, pp.59-67.
Yahoo Finance (2017) Income statement.[Online].Available at:
https://in.finance.yahoo.com/quote/DEB.L/financials?p=DEB.L (Accessed: 27th October 2017)

Financial Analysis and Management 23
Appendices
1) Profitability Ratios
Profitability
ratio
Debenhams
Plc
S. No Formulas
2016 (In GBP
millions)
2015 (In
GBP
millions)
2014(In GBP
millions)
2013(In
GBP
millions)
2012(In
GBP
millions)
1
Gross Profit
ratio
Gross
profit/Net
Sales * 100
293/2,342*10
0 = 12.51
299/2323*
100 = 12.8
279/2313*10
0 = 12.06
310/2282
*100 =
13.5
302/2230
*100 =
13.5
2
Return on
Assets
Net
Income/As
sets *100
86/2191*100
= 3.9
94/2143*1
00 = 4.3
87/2148*100
= 4.05
128/2133
*100 =
6.0
125/2091
*100 =
5.9
3
Return on
Equity
Net
Income/Sh
areholder
equity 86/884 = 0.09
94/853 =
0.11 87/767 = 0.11
128/744
= 0.17
125/661
= 0.18
Profitability
ratio of Mark
and Spencer
S. No Formulas
2016 (In GBP
millions)
2015 (In
GBP
millions)
2014(In GBP
millions)
2013(In
GBP
millions)
2012(In
GBP
millions)
1
Gross Profit
ratio
G P/N S *
100
4128.4/10555.
4*100 = 39.11
3985.5/10
311.4*100
= 38.65
3870.7/10309
.7*100 = 37.5
3797/100
27 *100 =
37.8
658/9934
*100 =
6.62
2
Return on
Assets
Net
Income/As
sets *100
406.9/8254
*100 = 4.9
487/8,476
*100= 5.7
525/8196 =
6.4
467/7903
*100 =
5.9
468/7568
*100 =
6.1

Financial Analysis and Management 24
3
Return on
Equity
Net
Income/Sh
areholder
equity
407/3445=
0.11
487/3200=
0.15
525/2707=
0.19
467/2505
= 0.18
460/2503
= 0.18
2) Liquidity Ratio
Liquidity
Ratio of
Debenhams
Plc
Ratios Formulas
2016 (In
GBP
Millions)
2015 (In
GBP
Millions)
2014 (In
GBP
Millions)
2013 (In
GBP
Millions)
2012 (In
GBP
Millions)
1
Current
ratio
Current
Assets/Current
liabilities
503/688 =
0.73
460/696 =
0.66
486/758 =
0.64
471/742 =
0.63
460/727 =
0.63
2 Q R
Total current
Assets-
Inventories-
Prepaid
expenses/current
liabilities
503 -326-
51/688 =
0.18
460- 332-
50/696 =
0.11
486-346-
47/758 =
0.12
471-358-
57/742=
0.07
460-332-
52/727 =
0.10
Liquidity
Ratio of
Marks and
Spencer Plc
Ratios Formulas
2016 (In
GBP
Millions)
2015 (In
GBP
Millions)
2014 (In
GBP
Millions)
2013 (In
GBP
Millions)
2012 (In
GBP
Millions)
1
Current
ratio
Current
Assets/Current
liabilities
1461/2105
= 0.6
1455/211
2 = 0.6
1369/2349
= 0.5
1268/223
8 = 0.5
1260/223
2 = 0.5
2 Quick ratio
Total current
Assets-
Inventories-
Prepaid
expenses/current
liabilities
1461-800-
155/2105 =
0.2
1455-798-
145/2112
= 0.2
1369-846-
129/2349 =
0.16
1268-767-
108/2238
=0.1
1260-760-
95/2232 =
0.1

Financial Analysis and Management 25
3) Gearing Ratios
Gearing
ratio of
Debenhams
Plc
S.N
O Ratios Formulas
2016 (In
GBP
Millions)
2015 (In
GBP
Millions)
2014 (In
GBP
Millions)
2013 (In
GBP
Millions)
2012 (In
GBP
Millions)
1
Capital
Gearing
ratio
Long term
debt/Shareholde
r funds
197/884 =
0.22
197/853 =
0.23
221/767 =
0.28
233/744 =
0.31
245/661 =
0.37
2
Interest
Coverage
EBIT or Operating
Profit/Interest
Expense
119/14 =
8.5
134/17 =
7.8
129/14 =
9.2
168/11 =
15.27
175/12 =
14.5
Gearing
ratio of
Marks and
Spencer Plc
S.N
O Ratios Formulaes
2016 (In
GBP
Millions)
2015 (In
GBP
Millions)
2014 (In
GBP
Millions)
2013 (In
GBP
Millions)
2012 (In
GBP
Millions)
1
Capital
Gearing
ratio
Long term
debt/Shareholde
r funds
1727/3445
= 0.50
1698/320
0 = 0.53
1606/2707
= 0.59
1677/250
5 = 0.66
1650/249
0 = 0.66
2
Interest
Coverage
EBIT or Operating
Profit/Interest
Expense
515/101 =
5.09
620/100 =
6.2
599/121 =
4.9
664/125 =
5.3
660/120 =
5.5

Financial Analysis and Management 26
4) Efficiency Ratios
Efficiency
Ratios of
Debenha
ms Plc
S.N
O Ratios Formulas
2016 (In
GBP
Millions)
2015 (In
GBP
Millions)
2014 (In
GBP
Millions)
2013 (In
GBP
Millions)
2012 (In
GBP
Millions)
1
Inventory
Turnover
ratio
Cost of
Sales/Average
Inventory
1928/326
= 5.9
1972/332
= 5.9
2033/346 =
5.8
2024/ 358
= 5.6
2048/332
= 6.1
2
Accounts
receivable
turnover
Net
Sales/Accounts
receivable
2342/31 =
75.5
2323/28 =
82.9
2313/27 =
85.6
2282/21 =
108.6
2230/23 =
96.9
3
Fixed
asset
turnover
ratio
Net Sales/Fixed
assets -
accumulated
depreciation
2342/906
= 2.5
2323/966
= 2.4
2313/1004
= 2.3
2282/1053
= 2.1
2230/1050
= 2.1
Efficiency
Ratios of
Mark and
Spencer
Plc
S.N
O Ratios Formulas
2016 (In
GBP
Millions)
2015 (In
GBP
Millions)
2014 (In
GBP
Millions)
2013 (In
GBP
Millions)
2012 (In
GBP
Millions)
1
Inventory
Turnover
ratio
Cost of
Sales/Average
Inventory
6427/800
= 8.0
6325.9/79
8 = 7.9
6439/846 =
7.6
6230/767
= 8.1
6132/741
= 8.2
2
Accounts
receivable
turnover
Net
Sales/Accounts
receivable
10555/168
= 62.8
10311/177
= 58.2
10310/181
= 56.9
10027/141
= 71.1
10020/135
= 74.2

Financial Analysis and Management 27
3
Fixed
asset
turnover
ratio
Net Sales/Fixed
assets -
accumulated
depreciation
10555/150
1 = 7.03
10311/171
7 = 6.0
10310/186
0 = 5.5
10027/200
6 = 4.9
10020/200
1 = 5.0
5) Stock performance ratios
Stock market
performance
ratios of
Debenhams
Plc
S.N
O Ratios Formulas
2016 (In
GBP
Millions)
2015 (In
GBP
Millions
)
2014 (In
GBP
Millions)
2013 (In
GBP
Millions)
2012 (In
GBP
Millions)
1 EPS
Profit after tax
and preference
dividends /
number of shares 0.07 0.07 0.07 0.09 0.1
2
Dividend
Yield
Dividend per
share/market
value per share 5.9 4.64 4.52 4.66 2.89
3
Dividend
payout ratio
Total dividends
paid/Profit after
tax 43 46 39 33 30.6
4 P/E ratio
Market value per
share/EPS 8.71 10 9.3 11.63 9.9
Stock market
performance
ratios of
Marks and
Spencer Plc
S.N
O Ratios Formulas
2016 (In
GBP
Millions)
2015 (In
GBP
Millions
)
2014 (In
GBP
Millions)
2013 (In
GBP
Millions)
2012 (In
GBP
Millions)
1 EPS
Profit after tax
and preference
dividends /
number of shares 0.49 0.59 0.64 0.56 0.64