Financial Performance and Position of R Plc: Ratio Analysis

Business Performance

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
Evaluating and commenting on the financial performance and position of R plc.......................3
CONCLUSION................................................................................................................................6
RECOMMENDATIONS.................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Financial statement analysis may be served as a process which business unit and its
stakeholders undertake for taking significant decisions. Ratio analysis tool helps in summarizing
and interpreting final accounts under different categories. This report will shed light on the
extent to which R Plc is performing better over S Plc.
Evaluating and commenting on the financial performance and position of R plc
Ratio analysis of R and S plc for the period of 2020 is enumerated below:
Profitability ratio
This financial metric helps in evaluating company’s ability in relation to generating
returns by taking into account sales, operating expenses, shareholder’s equity etc (Miransyah and
Dempo, 2021).
Particulars Formula R Plc Figures (in £)
S Plc Figures (in
£)
Total assets 26806
Currents
liabilities 9466
Capital employed 17340
Gross profit 10,880
Operating profit 5,313
Sales 26,245
GP ratio Gross profit / sales * 100
10,880 / 26,245 *
100
= 41.46% 38%
OP ratio
Operating profit / sales *
100
5313 / 26,245 * 100
20.2% 18%
ROCE EBIT / capital employed
5313 / 17340 * 100
= 30.6% 25%
The above depicted table shows that GP and OP ratio of R Plc was higher in the period of
2020 such as 41.46% & 20.2% respectively. In addition to this, ROCE of the firm was also
higher in comparison to S Plc. Referring all such aspects it can be said that profitability position
of R Plc was good. It shows that business unit exerted effectual control on both direct and