Comparison of Financial Analysis: Dunelm Plc vs Halfords Group Plc

This presentation compares the financial analysis of Dunelm Plc and Halfords Group Plc, focusing on profitability, liquidity, and efficiency ratios. It analyzes the net margin, average asset turnover, return on equity, return on investment capital, current ratio, quick ratio, financial leverage, debt/equity ratio, payable period, inventory turnover, fixed asset turnover, and asset turnover. The presentation concludes that Dunelm Group Plc is more profitable and beneficial for investors.

TASK 2

INTRODUCTION
Analysing the financial resources there is need of having the
authenticated sources and the relevant data which in turn
helps the organisation in making appropriate decision
making. Thus, this presentation will reflect comparison of the
financial analysis of Dunelm Plc and Hlafords Group Plc.

PROFITABILITY RATIOS
Dunlem Group plc Halfords Group plc
Profitability
ratio
2016 2017 2016 2017
Net margin 11.61 7.65 6.22 5.15
Average
Asset
turnover
2.56 2.45 1.46 1.48
Return on
equity
99.97 69.72 16.43 13.88
Return on
investments
capital
53.09 33.6 14.2 12.06

INTERPRETATION
 In accordance with the net margin Dunlem Group Plc is having
better operational performance or revenue gathering than Halfords
Group plc.
 The profitability of Dunlem Group Plc is more than Hlfords Group
Plc. Thus, it can be said that the organisation is capable of reducing
costs as well as having the adequate sales revenue.
 Investors of Dunlem plc will be beneficial as organisation have
adequate return over their equity so they will make fruitful dividend
payment.

LIQUIDITY RATIO
Liquidity
ratio
2016 2017 2016 2017
Current ratio 1.46 1.5 1.05 1.1
Quick ratio 0.23 0.17 0.19 0.2
Financial
leverage
3.48 3.93 1.74 1.9
Debt/equity 0.95 1.26 0.09 0.2

INTERPRETATION
 In accordance with the liquidity and ability of organisations in
meeting the short term and long term debts there is tough
competition between both the firms.
 In context with financial leverage Dunlem Group Plc is having
strong financial leverage ratios.
 In terms of debt equity both the firms able to meet the debts and
make payments to their shareholders.

EFFICIENCY RATIO
Efficiency
ratio
2016 2017 2016 2017
Payable
period
43.16 49.16 78.78 71.24
Inventory
turnover
3.54 3.54 3.11 3.07
Fixed asset
turnover
5.37 5.25 9.68 10.42
Asset
turnover
2.56 2.45 1.46 1.48

INTERPRETATION
 In terms with the Efficiency ratios Halfords Group Plc are quite
beneficial in having the adequate payable period.
 The asset turnover ratio of Halfords Group Plc is better and adequate
than the Dunlem Group Plc.
 The Inventory Turnover ratio of Dunlem Group Plc is better than
Halfords Group Plc which indicates that this firm is better in
gathering the adequate inventory.

CONCLUSION
On the basis of such financial analysis it can be concluded
that Dunlem Group Plc will be fruitful as per investment
point of view as well as it helps in making the adequate
profitability and best revenue gathering to their investors.

REFERENCES
Zeitoun, M. А. and Mdawar, B. W., 2016. Role of financial
analysis in improving performance in banking industry. An
empirical study on Commercial Bank of Syria. Экономика и
предпринимательство. (3-1). pp.693-699.
Asquith, P. and Weiss, L. A., 2016. Determining a Firm's
Financial Health (PIPES‐A). Lessons in Corporate Finance: A
Case Studies Approach to Financial Tools, Financial Policies,
and Valuation. pp.7-25.
Dunelm Group PLC. 2017. [Online]. Available through
:<http://financials.morningstar.com/ratios/r.html?t=DNLM>.