Ask a question from expert

Ask now

Financial Statement Analysis Assignment Sample

24 Pages3522 Words251 Views
   

Added on  2021-02-21

Financial Statement Analysis Assignment Sample

   Added on 2021-02-21

BookmarkShareRelated Documents
Financial StatementAnalysis
Financial Statement Analysis Assignment Sample_1
Table of ContentsINTRODUCTION...........................................................................................................................1TASK...............................................................................................................................................1Overview of Company:..........................................................................................................1Analysis and interpretation of financial statement of NEXT PLC:........................................1Analysis and interpretation of financial statement of DEBENHAMS PLC:.........................2Ratio Analysis:.......................................................................................................................3SWOT analysis of Next Plc:...................................................................................................7CONCLUSION................................................................................................................................8REFERENCES................................................................................................................................9ANNEXURE..................................................................................................................................10
Financial Statement Analysis Assignment Sample_2
INTRODUCTIONAnalysing financial statement is vital for a business entity as it helpful in providingreliable source for taking momentary and effective decisions. Financial statements are analysedby external stakeholders to obtain a complete understanding of entire performance of anyparticular company, and also they can compare two or more corporates (Cooper, 2017). Internalstakeholders can also apply such analysis to manage and track the fiscal resources of company.The study contains an analysis of financial statements of company NEXT Plc and its competitorDEBENHAMS Plc. Study also evaluate how internal and external factors influencing company'sperformance, analysis of ratios and flow of cash. TASKOverview of Company:Next Plc: It is retailer of home products, clothings and foot-wears in UK. Company alsohave its business operations across the world. It has about 700 stores worldwide. In sales amountcompany holing top position in UK. Company is listed in Stock Exchange of London. It is knowsfor providing products at moderate price (Next Plc. 2019). Company's vision is to expand itsbusiness territory and launch large range of new products. It is operating its business and tradethrough headquarters at Enderby, Leicestershire, England, United Kingdom. It has approx 44000employees all over the world. Debenhams Plc: it UK's multinational retailer and operating its business underdepartmental format. Company has approx 179 stores across the world. It engaged in sellinghousehold items, furniture and clothings at retail price. Specially in UK and Ireland company hasdepartment stores only with its own products (Debenhams PLC. 2019). It is listed in LondonStock Exchange. It has headquarters at 10 Brock Street, London, England, United Kingdom.Company has classified product range in Fashion clothing, cosmetics, accessories, home andfurniture, shoes, gifts, electricals and toys. Analysis and interpretation of financial statement of NEXT PLC:Financial Statements of a corporate combines income/revenue statement, balance sheetand other accounts prepared for finalisation of books. Each of them defines entity's performancethoroughly while covering different variables. In this context following points containsinterpretation and complete analysis of aspects of financial statement of NEXT Plc, as follows:1
Financial Statement Analysis Assignment Sample_3
Income statement of Next Plc: Company has reported turnover of GBP 4056 million inyear 2018 whereas in year 2017 it was GBP 4090 millions and 4170 millions in year2017. Which points out that company's overall turnover has been decreased over the threeyear. Main reason behind decreasing turnover is inflation in economy and more focustowards Asian countries. Company's operating income is 760 million, 819 million and865 million during the year 2018, 2017 and 2016 respectively, exhibiting a decreasingtrend. Company has net profit amounting 592 million in year 2018 which was 635million and 667 million in year 2017 and 2016 continuously. It showing that company'spower to gain earnings has been decreased. Balance Sheet of Next Plc: Total assets amounting 2562 millions has been reported bycompany in year 2018, which was of 2405 and 2330 millions during year 2017 and 2016.It shows an increasing trend in company's value of assets. Where as total externalliabilities are 2079 millions in year 2018, in year 2017 and 2016 it was 1894 millions and2018 millions showing a slight decrease in 2017 but overall increasing trend. InShareholder's wealth company has reported a moderate trend, as Company's shareholderfunds are increased 312 millions to 511 millions from 2016 to 2017 but afterwards in2018 it has been decreased to 483 millions due to increasing deficit in accumulated othercomprehensive income. Cash Flow Statement: Company has reported positive cash flow from its operatingactivities during the year 2016, 2017 and 2018 which is 608 millions, 700 millions and615 millions respectively, exhibiting upward trend. But company's net cash flows arenegative, which is -508 millions, -584 millions and -584 millions during respectiveperiod. It is due to heavy capital investment over the period. Analysis and interpretation of financial statement of DEBENHAMS PLC:Multinational companies like Next Plc and Debenhams Plc prepares consolidatedfinancial accounts to show their overall performance during any specific period. Followingpoints explains performance evaluation through financial statements of Debenhams Plc, asfollows: Income statement of Debenhams Plc: This Company has also reported a decreasingtrend in aggregate revenue collected from different stores. Company's turnover has beendecreased from 2341.70 millions to 2277 millions during 2016 to 2018. This decrease is2
Financial Statement Analysis Assignment Sample_4
reported due to inflationary effects and failure of department stores format. Company'soperating income is negative in 2018 i.e. loss of 173.70 millions. Which was 122.50million and 83.40 million in year 2016 and 2017 respectively. Net loss of company in2018 is 461 millions whereas company has gained earning in 2016 and 2017 amounting85.90 and 48.80 millions respectively. Company should take its serious as a continuousloss can lead to decline in brand value. Balance Sheet of Debenhams Plc: Company's total assets are also decreased during2016 to 2018, however a minor improvement has been reported in year 2017. Company'stotal assets amount are 1967.90, 2265.80 and 2191.00 millions in 2018, 2017 and 2016respectively. Company's shareholder fund also has decreased from 883.90 to 489.40millions during the year 2016 to 2018, due to decrease in net profit in 2017 and net lossin year 2018. Company is required to improve their profitability scale in order to improveshareholder's wealth. Overall liabilities of company showing increasing trend which inrun can hurt company's performance and liquidity. Cash Flow Statement: Company's operating cash flow is 126.5o million in year 2018,189.30 million in year 2017 and 224.90 million in year 2016. Where as overall cash flowis positive during three years which is 38.90, 19.70 and 40.80 million during year 2016,2017 and 2018 respectively, showing an uneven trend in flow of cash. From above analysis is has been articulated that Next Ltd's performance is better ascompare to Debenhams Plc. However it is recommended that company should improve their netprofits and turnover to sustain their market share. Overall comparison shows that company isenjoying competitive advantages to an extent which helping it to retain profitability even inadverse competitive environment.Ratio Analysis:In present trade environment every company want to ensure their performance in all context. Sodifferent fiscal ratios are computed by companies for assessment of their performance asliquidity position, solvency position etc. Ratios are assessed and compared with standards toknow actual efficiencies of company (DeFusco and et.al., 201). Following tables and pointsexhibits ratio analysis of both companies, as follows:Profitability Ratios: This ratio defines company performance in terms of profitably. These aremost considerable ratio as they provide an overview of company's ability of earning profits.3
Financial Statement Analysis Assignment Sample_5
These ratios includes Net Profit Margin ratio, operating profit margin ratio, gross profit marginratio etc (Doxey, 2014). Following is comparison of ratios and analysis of profitability ratios ofboth entities, as follows:Net Profit Margin: It exhibits how efficiently an organisation is earning income after itsall expenses.201820172016Net Profit Margin = Net income/ Turnover *100 Next Plc14.59%15.53%15.99%Debenhams Plc -20.25%2.09%3.67%Presented table shows that Next Plc's net profit margin has been decreased 15.99% to14.59% which shows that company's net incomes from businesses are continuously decreasing.This is due to declining in company's foreign revenue. Whereas in Debenhams net profit marginhas reached at negative point i.e. -20.53% in year 2018, and also a decline in 2017 is reported. As per overall comparison Next Plc's net profit percentage is more than Debenhams Plcwhich shows that Next is more efficient to generate earnings. Operating Margin Ratio: It exhibits how efficiently company is earning incomes fromits core business activities (Zeff, 2016).4201820172016-0.25-0.2-0.15-0.1-0.0500.050.10.150.2Next PlcDebenhams Plc
Financial Statement Analysis Assignment Sample_6

End of preview

Want to access all the pages? Upload your documents or become a member.

Related Documents
Marketing Plan of Debenhams PLC
|16
|3097
|103

Managerial Finance: Financial Analysis of Marks and Spencer Plc and Next Plc
|21
|3903
|192

Debenhams plc: Analysis of Areas of Failure and Recommendations
|11
|2353
|338

A case study on Debenhams PLC
|15
|4591
|268

Interpret Market Trends and Developments
|21
|1501
|85

Financial Analysis of TESCO Plc Report
|15
|2438
|89