Financial Analysis of Marks and Spencer: Ratios and PESTLE Analysis

Accounting financial analysis report 0
Financial analysis

Accounting financial analysis report 1
Abstract
The report reviews the financial position of a retail company named as Marks and Spencer,
operating in United Kingdom. It provides an overview of the entity, its core activities in
which it deals and the key competitors of company in the market. The report also discuss
about the industry in which it operates and current position of M&S in the market. The
analysis is done for 2015 and 2016 with the help of calculating various ratios and comparing
them with the industry averages or the competitors of M&S. In the later part, a critical
evaluation of company’s position is been done by using a business tool named as PESTLE
analysis. It gives insights about the position of M&S in its industry and the changes
happening in the environment in which the firm operates. Lastly, a conclusion is been given
for all the analysis and findings.

Accounting financial analysis report 2
Contents
Introduction...........................................................................................................................................3
Overview of Marks and Spencer...........................................................................................................3
Analysis of financial position – Ratios and comparison with industry averages....................................5
Liquidity ratios..................................................................................................................................5
Profitability Ratios.............................................................................................................................6
Efficiency ratios.................................................................................................................................7
Gearing ratio......................................................................................................................................8
Investors Ratio...................................................................................................................................9
Critical evaluation of M&S position......................................................................................................9
Political...........................................................................................................................................10
Economic.........................................................................................................................................10
Social...............................................................................................................................................11
Technological..................................................................................................................................11
Legal Factors...................................................................................................................................11
Environmental Factors.....................................................................................................................12
Conclusion...........................................................................................................................................12
References...........................................................................................................................................13
Appendices..........................................................................................................................................16
Appendix 1......................................................................................................................................16
Appendix 2......................................................................................................................................16
Appendix 3......................................................................................................................................16
Appendix 4......................................................................................................................................17
Appendix 5......................................................................................................................................17

Accounting financial analysis report 3
Introduction
Financial analysis is a term used for evaluating and analysing the financial performance of a
company. This analysis provides a greater insight to the potential investors about company’s
financial position in the market. It is basically a process of evaluating the budgets, projects
and other finance related businesses for determining their performance. Generally it is used to
analyse the stability, solvency, liquidity and profitability of an entity. Among the various
tools available for conducting the analysis, ratio analysis is the most common and preferred
method used for measuring the firm’s performance in several financial aspects. The ratios are
calculated on the basis of data mentioned in the income statement, balance sheet and cash
flow of the company which are reported in its annual report (Fridson and Alvarez, 2011).
The report contains a performance and position analysis of Marks and Spencer. It includes a
brief summary about M&S and its core activities along with the identification of the market
and its key competitors. Analysis is been done by calculating various profitability, liquidity
and efficiency ratios. It also compare those ratios with the industry averages in which M&S
operates. A critical evaluation of the company is also done using the PESTLE analysis. The
findings of the report are concluded in its last part, providing the recommendation on
company’s position and performance in the market.
Overview of Marks and Spencer
M&S is a UK based company and is a multinational retailer having its headquarters situated
in London. It deals in selling of clothing, home products and luxury food products. The
company was founded in 1884 by Michael Marks and Thomas Spencer in Leeds. Along with
its key products M&S has also started selling branded goods like Kellogg's Corn Flakes in
2008. M&S currently has 979 stores across the United Kingdom out of which 615 only sell