Evaluation of Financial Ratios of T plc

Business

Contents
Contents...........................................................................................................................................2
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
Evaluation of the ratios of T plc..................................................................................................1
CONCLUSION................................................................................................................................3
REFERENCES................................................................................................................................4

INTRODUCTION
Management of finances is a very crucial aspect as it helps the company to utilise and
maintain its resources in a very well and critical manner that can serve the purpose of the
company in the long run (Davidsson, 2016). In this report there is an elaborated discussion done
of a firm which is T plc which is a retailing firm and is operating in a market since a pretty long
time and thus has captured a larger share in the market. Apart from that the report also includes
an evaluation of all the ratios and related aspects of the firm which is very important with regard
to the mentioned firm in the industry.
MAIN BODY
Evaluation of the ratios of T plc
Ratios are very crucial as it help the company to compare and contrast its performance in
the day to day manner so that it can analyse the performance of the organisation which can prove
beneficial in taking appropriate decisions regarding the working of the firm. There are a number
of different ratios that are evaluated by a firm so that it can stand well ahead in the market as
compared to its rivals and thus the most important as well as crucial ones are elaborated in this
report which includes profitability ratios, liquidity ratios, working capital management, and stock
market performance ratios (Engwall, Kipping and Üsdiken, 2016).
Profitability ratios- These ratios further include sub ratios which are net profit margin and
gross profit margin and thus it can be said that these ratios helps in evaluating the overall
profitability of the firm so that profit generating resources can be analysed in an effective and
efficient manner. From the given data it can be said that both the profit margins that is net and
gross profit margin are in a good position of the company which is T plc in all the 3 years as the
gross margin is 39, 40, and 40% for the year 2018, 2019, and 2020 respectively, while the net
profit margin is 5.8, 5.9, 6.05 for the year 2018, 2019, and 2020 respectively. Both the ratios are
situated in a good position with respect to the industry ratios as they are 37 and 4 for gross profit
and net profit margin respectively.
Liquidity ratio- These ratios measure the short term paying capacity of the firm and thus
it can be said that these ratios are very crucial in determining the paying capacity of the firm and
thus these ratios include current ratio and quick ratio. Both the ratios that is current and quick are
declining on a constant basis and it is not a very good situation for the firm as the current ratio