Financial Performance Analysis of R Plc and Comparison with Competitor S Plc

BUSINESS PERFORMANCE

TABLE OF CONTENTS
TABLE OF CONTENTS..............................................................................................................2
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Calculation of ratio for R plc......................................................................................................3
Comparative ratios of R Plc and S Plc........................................................................................4
Financial performance analysis...................................................................................................4
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................7

INTRODUCTION
Analysis of business performance involves assessment of day to day activities of the
business to identify their financial position at the end of the given period (Perini and et.al., 2020).
In this report, such financial performance analysis will be done in respect of R plc. And its
performance will be compared to that of its competitor S plc. which is also in the same industry.
The analysis will be done through the calculation of various ratios based on profitability,
liquidity, capital structure management and stock market performance.
MAIN BODY
Calculation of ratio for R plc.
Gross profit margin = Gross profit / Sales * 100
= 10880 / 26245 * 100 = 41.46%
Operating profit margin = operating profit / Sales * 100
= 5313 / 26245 * 100 = 20.24%
Return of capital employed = Operating profit / capital employed * 100
Capital employed = total assets – current liabilities = 26806 – 9466 = 17340
ROCE = 5313 / 17340 * 100 = 30.64%
Current ratio = current assets / current liabilities
= 15089 / 9466 = 1.59
Quick ratio = (Current assets – Inventories) / Current liabilities
= (15089 – 6983) / 9466 = 0.85
Debt – Equity ratio = Debt / equity
Debt = loan term loan = 2800
Equity = Share capital + reserves = 5000 + 9540 = 14540
Debt – equity ratio = 2800 / 14540 = 0.19 * 100 = 19%
Interest coverage ratio = Earnings Before Interest & tax (Operating profit) / Interest payable
= 5313 / 980 = 5.42
Dividend coverage ratio = Profit after tax / Dividends paid
= 3033 / 1380 = 2.2
Earnings per share = Earnings available to shareholders (Profit after tax) / Number of shares
issued