Financial Analysis of Greggs Plc

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Added on 2020-10-22

Financial Analysis of Greggs Plc

Added on 2020-10-22

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FINANCIAL STRATEGICANALYSIS OF GREGGS PLC.

TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1PART 1: CONTEXT AND OVERVIEW........................................................................................1PART 2 RATION ANALYSIS AND EVALUATION...................................................................1Greggs Plc Financial performance..............................................................................................1REFERENCES................................................................................................................................3APPENDIX......................................................................................................................................4Ratio anlaysis..............................................................................................................................4

INTRODUCTIONPART 1: CONTEXT AND OVERVIEWGreggs plc is the largest bakery chain in United Kingdom as it had attained expertise insavoury products like sausage rolls, sandwiches, bakes and sweet items such as vanilla slices anddoughnuts. The organisation has a great standing for freshly prepared foods that their consumercan trust at the affordable prices and it aims at becoming the costumers' favourite. In 2106organisation have performed at good level at it has developed freshly prepared food line with thechanging food trends in the UK (A CORE Strategic Financial Analysis of Greggs Plc, 2018).The Greggs Plc have made great progress in its £25 million program in investments and the infuture it has made a plan to invest £100 million. The company had a tremendous journey so faras form a traditional bakery business it has transformed itself onto a winning brand in thedynamic food chain on the go market. This report would provide brief discussion about financialanalysis of Greggs plc over 2016 and 2017. PART 2 RATION ANALYSIS AND EVALUATIONGreggs Plc Financial performanceProfitability ratio analysis:GP ratio NP ratio Return on capital employedReturn on assets00.10.20.30.40.50.60.763.00%6.00%29.00%15.00%63.00%6.00%24.00%13.00%20162017The financial performance of Greggs plc is for the year 2016 can be defined as the totalsales for the years amounted to £894.2 million. The profits before tax of the organisation1

amounted to £80.3 millions. For the same year diluted earning per share stands at £6.8 andordinary divined was 31.0£.The return of the capital employed of the organisational was 28.1%respectively.While analysing financial performance of Greggs Plc over year 2016 to 2017 withcontext of various parameters such as profitability ratio, liquidity ratio, solvency and efficiencyratio. With context to profitability ratio, it has been articulated that company is giving constantgross profit of 63% which is good signal. On the contrary, its net profit was very lowcomparatively to gross profit which says that it has high operating expense which must be traced.Similarly, return on assets and capital employed both decreased from 2016 to 2017 (Williamsand Dobelman, 2017). Thus, it has been evaluated that its profitability is not up to mark, so thismust keep proper track of its expenses to attain high profit margin, return on assets and capitalemployed as well.Evaluation of Liquidity ratio:In the similar aspect, there is evaluation of liquidity ratio with context to two parameterssuch as current ratio and quick ratio. It has been analysed that both are not able to reach idealratio as 2:1 and 1:1 respectively. In simple words, company is not capable to repay its currentand quick liabilities. The current ratio have seen a growth in 2017 form 2016 and same for thequick ratio as well (Mohanram, Saiy and Vyas, 2018). The changes are too minor but it is due to2Current ratio Quick ratio 00.10.20.30.40.50.60.70.80.90.770.520.840.5520162017

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