(PDF) Analysis of Financial Statement
Added on 2020-11-12
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Financial StatementAnalysis
Table of ContentsINTRODUCTION: .........................................................................................................................1TASK...............................................................................................................................................1Overview of Halfords Group PLC:............................................................................................1Overview about Dunelm Plc: .....................................................................................................2Analysis and interpretation of financial statement of Halfords Group PLC:..............................2Analysis and interpretation of financial statement of Dunelm Plc: .......................................3Significance of cash flow, ratio and trends:................................................................................4Factors affecting cash flow,ratio and trends of companies:........................................................4Ratio Analysis and Interpretation of Halfords group PLC:........................................................4Ratio Analysis and Interpretation of Dunelm Plc: .....................................................................7Cash flow analysis of Halfords group PLC................................................................................9Cash flow analysis of Dunelm Plc: ..........................................................................................10CONCLUSION:.............................................................................................................................10REFERENCES..............................................................................................................................12Appendix:.......................................................................................................................................13
INTRODUCTION: The financial statement analysis is significant as it supplies purposeful curriculum to theshareholders and user of financial statement to help in decision making. Such analysis isimportant to them because they can take out useful information for their investment and otherdecision making purposes. In this report an in depth analysis and interpretation of HalfordsGroup PLC and Dunelm PLC from same sector,along with their strengths and adaptabilitieslevels with the help of comparison of company's most recent financial statements, cash flows andratio analysis. This report also contains existing internal and external factors majorly affectingthese company's future prospects. TASKOverview of Halfords Group PLC: Halfords Group PLC retailer of car parts, car enhancement, camping and touringequipment and bicycles and also leading operator in vehicle, servicing, maintenance and repairsin UK. It operates in two segments: First is Halfords Retail, which operates in both the UnitedKingdom and Republic of Ireland, and second is Halfords Autocentres, which operates in theUnited Kingdom. The Halfords Retail segment includes large product range that are availableonline, and at stores all over country selling motoring and cycling products. The HalfordsAutocentres segment provides car service, repair and covering customers throughout the UnitedKingdom and operating hundreds of centres across the United Kingdom.
Overview about Dunelm Plc:It is a UK based consumer retail company which provides home-wares and furniture.This company has record growth in last 39 consecutive years by increased sales year to year.Dunelm Plc is number 1 in the £13bn home-wares market with 8.1% share, thus it has capabilityto take leadership position in a fragmented sector. There is a opportunity to speed up theexpansion of our online business with an enlarged range, and better delivery options, appealingnew customers and transform our model for the future. There is a notable growth possibilities infurniture where our share is less than 1% in an £11bn market. Our innovative & liberaldistribution policy has increased dividend per share each year since coming on the London StockExchange in 2006. It is a multichannel retailer with 169 superstores, three high street stores. Ithas a website, Dunelm.com that featuring extended ranges and delivery facility (Home Delivery)Analysis and interpretation of financial statement of Halfords Group PLC:This report focuses on major three key area while analysing and interpreting the financialstatements of Halfords Group PLC: the structure of financial statements, the economic featuresof the industry in which the company is operating and theories the firm pursues to differentiateitself from its competitors. For better analysis and interpretation of financial statement ofHalfords Group PLC the following criteria is considered: Strategy followed by company: Halfords plc operates under the corporate strategy ofconcentric diversification by doing expansion into related businesses and marketactivities such as Halfords was shifted from spare parts of cycles to the sports clothingbusiness. Reason for such diversification is to reduce the failure risk in one segment(Doxey, 2014). Analysing strategy assists in identification of the significant steps takenby company through which Halfords developing and enhancing competitive position inthe marketplace.Standards and policies adopted by company: Every company is required to disclosestandards and policies adopted by company in preparation of financial statement forrelevant period. In this context Halfords prepares financial statements based on IAS andIFRS such as IAS 1 ,IAS 16,IAS 27, IFRS 11 although some standards are yet to beadopted by company.
Market trends and company's performance: Car and bicycle retailer Halfords has reporteda slight increase in annual profits after gaining market share in the motoring and cyclingsegment. This can be seen as favourable growth for company as pre-tax profits beforerestructuring costs pushed up approx 0.5 per cent to approx £81.5 million. Revenuesincreased approximately 1.7 per cent to about £1 billion. Also a favourable growth in carmaintenance and car accessories can be see as well. However day to day sales in cyclingwere down approx 0.9 per cent over the previous three year that shows weaker marketcondition. Income statement of Halfords group PLC – It shows profitability condition of company.This statement contains items operating expenses, operating income and other incomes(Vogel, 2014). . Net profit from this report is 55 million in 2018 and decreases from lastyears due to changes in tax policy. Balance sheet of Halfords group PLC – This shows company's assets and liabilitiesconditions at a particular date. . If there is assets side and liabilities side are equal andmatching so it will good for company because it means all items are recorded notmissing. In this statement of this particular company shows current assets is 279 millionin 2018 and comparative to last years it will increasing that are shows good position ofthe company (Zeff, 2016). In non current assets total amount is 503 million, so there istotal amount of assets side is 782 million that are continuously increase from previousyears. In liabilities side current liabilities total amount is 228 million. Analysis and interpretation of financial statement of Dunelm Plc:Financial statements analysis is often reported to senior management and board ofdirectors. They used it as input in decision making of company. It is also helpful for externalparties such as investors and regulatory bodies etc. to know more about organisation. There arevarious methods for this which are as: Income statement of Dunelm Plc:These statements are present net profit and gross profit carryforward from trading account. In 2018, operating income (68) million and operating expenses317 million. After all adjustments net income is (64) million due to decreases operating income. Balance sheet of Dunelm Plc: In this statement including two heads that are assets and liabilities.It provides position of total assets and total liabilities, it is divided into two sub-part that arecurrent & non current assets and liabilities. In current assets, those items which are converted in
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