BMG704 International Finance: M&S Financial Analysis & Developments

This report provides a financial analysis of Marks and Spencer (M&S) within the context of international finance. It examines recent developments in the international financial environment, such as changes in short-term interest rates and foreign exchange markets, and their impact on M&S's business operations. The report also discusses key elements of international finance, including funding sources and dividend policy, and how M&S manages these aspects. Furthermore, it includes a financial performance analysis of M&S, using ratio analysis to assess the company's liquidity, profitability, and efficiency based on financial data from 2019/20 and 2018/19. The report concludes by highlighting the importance of these factors in the company's overall financial health and international business strategy.

INTERNATIONAL
FINANCE

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Recent developments of international financial enviornmnets...................................................3
Key elements of international finances.......................................................................................5
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Financial analysis is about to analysis and interpret the performance about financial
records of the organisation. This report is based on the case study of Marks and Spencer
Company in context to its financial performance. The organisation was established in the year
1884 by the founders Michael Marks and Thomas Spencer. Company owns its headquarter in
London, United Kingdom. The organisation is currently associated with approximately 15000
business locations at a global level. This report will discuss the financial analysis in respect to
the company. Henceforth, the report emphasis over the two recent developments associated with
the financial environment that influenced the business operations of company. Key elements will
also be discussed under this project related to the financial management. Furthermore, this
project will also discuss the overall financial performance of organisation. The financial
performance of the organisation associated with the two most recent financial years will be
discussed under this project.
MAIN BODY
Recent developments of international financial environment
Financial environment is comprises with the factors and elements influence the financial
operations and functions of business entity. The role of the financial environment is to strategies
the financial resources associated with the business entity. The international financial
environment is full of all different forces and factors that significantly effect the financial
environment and culture of the business entity. This is a strategic part of the financial
environment that all policies and practices of the business entity is affiliated with the
international financial environment (Valaskova and et.al., 2018). Financial environment affect
and influence all finance related practices and services of the business venture. All types of
financial forces are associated with the environment that significantly affect over the business
operations of company. The role of financial environment is to direct and guide the proper
culture and environment that can sustain a good and healthy balance in the financial management
of the business organisation. The international financial environment has introduced the easy

short term interest rate practice. This is about to provide an ease in short run interest rate
applicable over the business environment. This is among the most crucial modification that could
influence significantly to the Marks and Spencer Company international business operations.
Interest rate are the term used to denote the charges company require paying against of
undertaking loans and borrowings in the market. This become crucial for the business entity to
deal with the interest rate progressively. Short term interest rate are associated with the short
term loans taken only for the shorter duration and then to repay such a loan.
Changes in the short term interest rate influence the borrowing policy of the Marks and
Spencer Company. The organisation seek financial resources to mitigate its both short terms and
fond term business goals. Short term loans are the one that is strategically focused to meet The
changes made in the policy related to the short term interest rate could rive the Marks and
Spencer Company to reinforce the policy of business entity in respect to its short term borrowing
practices. Rate of interest is the primarily factor that affect the borrowing decision-making of the
business organisation (Anthony and et.al., 2019). Financial professionals of the Marks and
Spencer Company borrow all its loans on the basis of the interest rate charge by the respective
entity. Slowing down the interest rate over loan could make the loans more affordable for the
business unit. This make it crucial for the business venture to generate financial resources in a
more affordable way. Ease provided under the short term interest could allow the Marks and
Spencer Company to control its overall cost of new projects, product launch and all other
practices which required financial resources generated against the borrowing of funds. This
could further strengthen the borrowing ability of the organisation. Majority of the funds
generated by the company are based on approaching banks and other financial institutions to
raise the funds (Panchal, 2018). Marks and Spencer Company raise both the types of finances
long term and short term finances. Limiting the interest rate over short term borrowing could
support the company to raising effective capital to channelise the different operation and
functional activities of the organisation. Easy access to tre funds could make the organisation
more capable enough to grow in the business. In the last 10 financial years the overall growth
and development possibility of the business venture has improved. The smooth allocation of
funds and financial resources played a significant role in creatuing an ease in generation of
finances.

The recent developments in the international financial market also offered the
modifications under foreign exchange market. This is occurred after the collapse of Lehman
Brothers. The foreign exchange market could target to improve under this practice. International
market is very volatile in nature that could make more capable with the implication of this
practice. The amendments could provide an ease in the foreign exchange market at the
international level. This modifications could provide a strong support to all the multinational
cooperation like Marks and Spencer Company in order to raise the financial resources. The
policy has changed the dimensions of the stock market at the international level. After the
inclusion of new policies related to funds and finances stock market at the international level
become more active (Oláh and et.al., 2019). Stock market is among the key source of raising the
financial resources for the business entity and this whole practice could motivate the business
entity to generate funds heavy in numbers. Modification in the foreign exchange market could
make the company grow internationally. The exchange currency rate could also control after this
which also allowed the global investors to invest in funds of the Marks and Spencer Company.
Capital generation become easier after this that further enhanced the overall growth and
development possibilities of the Marks and Spencer Company. Foreign exchange terms and
conditions create a direct impacts over the international transactions associated with the business
venture. The role of the foreign exchange is huge in context to the Marks and Spencer Company
as this favour the business entity to deliver its operations smoothly.
Key elements of international finances
International finance management is a sum of all different factors and elements that
influence the operations of entity. Financial sources are the one of the core area or factor
associated with the international finances. Source of finances are the funding sources associated
with business organisation (Agha And et.al., 2018). Dividend policy is the policy or the practice
adopted by the business venture to allocate dividend to all the investors associated with the
business venture. Dividend is the significant part of the business venture that favour the
organisation in approaching the allocation of funds ina very significant way possible.
Sources of funds
Funding sources are the different resources and ways top generate financial resources.
Funding source is the option available with the business entity ion process to generate and
allocate the financial resources associate with the business venture. Marks and Spencer Company

approach both types of funding source one is long termed funding source and the other one is
short term funding source. Long term funding sources involve bank finance, financial
institutions, private finances, angle investors, crowd funding and such like sources that can
potentially allow the business venture to allocate funds in business (Chu And et.al., 2017). The
long term funding sources are the key areas that support the business venture to allocate the
funds and financial resources in the best way possible. Financial professional require to analysis
these funding sources so that best level of funds could have been raised by the company.
In order to raise short term funds Marks and Spencer Company approach different
sources like bank finance, private financial institutions, angle investors, personal funding sources
and such like sources that can allow the business entity to utilise the funds for shorter duration of
time (Hussain, Salia and Karim, 2018). This become significant for the financial entity to
allocate the funds only for short duration and by completion the respective objective company
prepare the repay strategy to pay back all the borrowing value. This is a key aspect that company
needed to evaluate in order to mitigate its funding requirements.
Long term and short term financial resource are approached by company with evaluation
of various choices such as length of the finance, term and conditions, tenure, security and such
like elements that are associated with the generation of funds in the organization. This is a key
area that needed to be analysed immensely by the financial professional so that best form of
funds could have been created or generated by the business entity. In the market for
multinational cooperation like Marks and Spencer Company there are multiple options are
already available to allocate the funds. AS the company own a strong brand value that support
the organisation to generate all its funding requirements in market (Bellavitis and et.al., 2017).
This make it significant that company also require to evaluate its liquidity situation while
approaching the different funding sources available in the market. Liquidity is a very important
part of business operations. In the day to day operations liquidity provide a strong support to the
business venture for achieving best level of control in against to deliver the business function of
company.
Dividend policy
Dividend is the return over the investment made by the shareholder. This is an outcome
against the investment is made by the investors and the business entity ion the regular operation's
and functional activity of the organisation. The dividend policy is about the practice or the policy

adopted by the business entity to allocate the dividend of the organisation. The dividend policy
of the business entity is very progressive in nature. Marks and Spencer Company is looking
forward to allocating the dividend that can offer the best suitable policies to the business venture.
Every year company try to provide the suitable dividend rate to the investors and the respective
shareholder group so that best level of growth and development of the business house could have
been done (Hyde, Talbert and Grayson, 2018). The investor of the company also expect to earn a
suitable return in the form of dividend that can favour the business entity to ensure the best level
of dividend in the market. The dividend policy of the business entity is such that this make it
significant for the business entity to ensure the best rate of dividend to its shareholder and
investor in the business. This is a very significant part of policy of the organisation that it
allocate the best level of dividend in business so that organisation can sustain the effective
growth in business.
The dividend policy of company is very significant in nature as it is more like allocating
suitable return to the business operations that can favour the best possible motivation to the
shareholders and investors of company to invest effectively in the returns of business venture.
Company try to allocate the approximately 10 to 15% of its overall reserves every financial year
so that maximum possible dividend could been allocated to the investors associated with the
business venture (Aljerf and Alhaffar, 2017).
3. Financial Performance Analysis of M&S company
Ratios Analysis
Particulars Formula M&S (£) m M&S (£) m
2019/20 2018/19
Liquidity Ratios
Current Assets 7582 1215
Current
Liabilities
12047 1849.4
Prepaid expense 172 84.8
Stock 1732 564.1
Quick assets Current Assets – Stock – prepaid
expense
5678 566.1
Current Ratio Current Assets / Current Liabilities 0.63 0.66

Quick Ratio Quick Assets/ Current Liabilities 0.5 0.3
Profitability Ratio
Net Profit/
Income
152 23.7
Net Sales 28993.0 10181.9
EBIT Net Income + Tax expense + Interest
expense
635 272.5
Capital
Employed
Total assets – Total liabilities 15890 8334.5
Net profit Ratio Net Profit/ Net Sales * 100 52% 23%
Return on
Capital
employed
EBIT/ Capital Employed * 100 4% 3.27%
Efficiency Ratio
COGS 26699 6589.5
Net Sales 28993 10181.9
Total Assets 27937 10183.9
Average
Inventory
2696.5 632.25
Inventory
Turnover Ratio
COGS/ Average Inventory 10.75 10.42
Total Assets
Turnover Ratio
Net Sales/ Total Assets 1.04 1
Market/ Investment Ratio
Earnings for
Equity
shareholders
144 23.7

Total no. Of
Equity Shares
2470 1905.6
Dividend per
share
3.9 0.5
Dividend Pay-
out Ratio
Dividend Per Share/ Earnings per
share
65 50
Earnings Per
Share
0.06 0.01
Interpretation of the result Profitability Ratio: The net profit of the M&S company in the year 2018/19 and 2019/20
was 23% and 52%. While on the other, the return on capital employed was 3.27% and
4% respectively which indicate that the company are able to manage its profitability
position in the market (Safii and Zulhamsyah, 2018). But for further improvement, the
company need to adopt the value-based pricing strategy and other ways to improve its
sales and reduce its variable cost of production. Efficiency Ratio: From the above calculations, it is analysed that the inventory turnover
ratio and total asset turnover ratio of the M&S company are higher than the previous
year. This means that company are able to manage its inventory and assets properly to
produce goods and services. For further improvement, the company need to just adopt the
Just-in-time inventory technique with the help of which they can reduce the inventory
holding cost. Liquidity Ratio: The current ratio of the company in the year 2018/19 was 0.66 and in the
year 2019/20 was 0.63 which means that the company are not able to manage its current
obligation with the use of only current assets. In order to improve this, it is advisable to
the company that they must reduce the credit period allowable to debtors and also, they
can allow discount to the customers who made early payments (Bschorer, Kuschke and
Strunz, 2017).
 Market Ratio: The investment and market position of the M&S company was quite good
as compared to the previous year because of the higher earning per share and dividend
pay-out ratio. That’s why it is always advisable to the company that they must keep their

shareholders happy (Michel, 2020). And for this the company need to increase its profits
and also need to manage its outstanding shares. The high issuance of shares will reduce
the company’s Eps which needs special attention.
CONCLUSION
Financial analysis is a practice that is about to evaluate and analysis the business
operations of the organisation. The process of financial analysis is such that this make it
significant for the business entity to evaluate the overall financial performance of the
organisation in the respective financial year. There are plenty of sources of finances such as bank
finance, angle investors, private financial institutions, crowd funding and so many plenty of
sources that support the business entity with support of the best possible funding allocation
practices. The ratio analysis is a technique that is used to analysis and evaluate the financial
performance of the business entity. This is more like evaluating the overall performance of
company with support of certain ratios like liquidity ratio, profitability ratio and many such
ratios associated with the business entity. All the various developments that recently became a
part of the financial market is specifically denoted under the project. Sources of fund section
clearly indicated that company can approach sources like bank, private investors, angle investors
and all such sources to mitigate both long term and short term financial requirements of the
organisation. Dividend policy of the company favour the organisation to deal with the investors
expectations.

REFERENCES
Books and Journals
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jet fuel production from camelina, carinata and used cooking oil. Applied Energy. 198.
pp.401-409.
Hussain, J., Salia, S. and Karim, A., 2018. Is knowledge that powerful? Financial literacy and
access to finance: An analysis of enterprises in the UK. Journal of Small Business and
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Funding Sources, Laws, and Policies. STAYING PUT: Adapting the Places Instead of
the People, pp.223-235.
Aljerf, L. and Alhaffar, I., 2017. Salivary distinctiveness and modifications in males with
diabetes and Behçet’s disease. Biochemistry research international, 2017.
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Panchal, N., 2018. How does Dividend Policy Impact the Value of the Firm?-An analysis of
selected Indian Sectors. Asian Journal of Management. 9(1). pp.99-106.