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Essay on Management of Retail Sector

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Added on  2020-06-04

Essay on Management of Retail Sector

   Added on 2020-06-04

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MANAGEMENT1
Essay on Management of Retail Sector_1
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1Economic Value Added Analysis................................................................................................1Total Shareholder Return.............................................................................................................3Net Assets Value..........................................................................................................................5Comparable ratio analysis............................................................................................................6Discounted cash flow analysis.....................................................................................................8CONCLUSION..............................................................................................................................10REFERENCES..............................................................................................................................122
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INTRODUCTIONIn the turbulent and highly uncertain global landscape, firms face ample of challengesand complexities in running successful business operations. For instance, change in cost ofborrowings, shareholders return expectations and others have a direct impact over company’sability to meet out their financial commitments. Therefore, proper corporate financial planningand sound investment decisions are necessary to stay strong on financial ground. Corporatefinance is a way through which managers devise distinctive short-term and long-term financialplan to meet out the primary objective of maximizing shareholder worth. Retail sector of UK isthe fastest growing industry, according to the ONS statistical report of 2017, year on yearindustrial sales rose by 2.5% which is comparatively greater than that of preceeding year to 2.1%(UK Retail Economics. 2017). Therefore, in the present assignment, a top retail firm Marks andSpencer (M&S) has been taken into consideration which is listed on LSE and FTSE 100 Indexconstituents. The purpose of the report is to make equity valuation following Discounted CashFlow model considering last 5 financial years. Besides this, shareholder return will be analyzefollowing Total Shareholder Return (TSR). In addition, EVA analysis, net assets value andcomparable ratios will be used to examine firm financial results. Economic Value Added Analysis EVA method implies incremental difference in firm’s return over its cost of capital. Thus,it identifies residual wealth by subtracting cost of capital from the operating margin generated bythe firm and determines true economic profitability (Lai and Shad, 2017). If EVA depictsfavorable outcome then it demonstrates that M&S made productive use of its investor’s capital orvice-versa. Investors use it to examine that whether company is making profitable use of theirshareholders capital or not (Hartman and et.al., 2017). EVA = NOPAT – (Capital invested*WACC)Capital = Total assets – short-term liabilities 1
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Items FY 2012FY 2013FY2014FY2015FY2016Total investment £5,268m£5,330m£5,555£6,084£6,3712
Essay on Management of Retail Sector_4

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