Financial Reporting: Ratio Analysis, Trend Analysis, Business from Investor's point of view

Financial Reporting

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
Ratio Analysis..................................................................................................................................3
Trend analysis..................................................................................................................................6
Business from Investor's point of view............................................................................................8
Limitation of analysis......................................................................................................................9
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
The businesses are required to communicate the financial information of company. Financial Accounting refers to specialized
accounting branch keeping track of the financial transactions of company. Companies using standards and guidelines record
transaction, summarize and present the information in financial statements or the financial reports. These reports include profit or loss
statements, balance sheet and cash flow statements. Companies are required to make proper reports for enabling the users of financial
information to make decisions. The investment is made by the investors if the financial position and performance of the company is
strong. This is analysed using ratio analysis of the financial statements of company. The Report will include the analysis of Next Plc
and Marks and Spencer about its profitability, liquidity and solvency ratios. It will also be covering the trend analysis and the
comments over the performance of business from view point of investor. This will also be covering the conclusions and
recommendations over the financial position of company. Report will give understanding about the ratios and measures that compnay
can take for their improvements.
Next plc Marks and Spencer
2018 2017 2016 2015
2019-
18
2018-
17
2017-
16
2016-
15
Liquidity ratio
Current assets 2032 1797 1660 1642 1490 1317 1723 1461
Current liability 1112 914 725 1170 2228 1826 2368 2104
Current ratio 1.83 1.97 2.29 1.40 0.67 0.72 0.73 0.69
Current assets 2032 1797 1660 1642 1490 1317 1723 1461
Inventory 502.8 466.7 451 486 700 781 758 799
Current liability 1112 914 725 1170 2228 1826 2368 2104
1

Liquid ratio 1.38 1.46 1.67 0.99 0.35 0.29 0.41 0.31
Activity ratio
Net credit sales 4167 4090 4097 4176 10377 10698 10622 10554
Average account receivable 1339 1248 1125 1050 322 308 318 321
Account receivable turnover
ratio 3.11 3.28 3.64 3.98 32.23 34.73 33.40 32.88
Net sales 4167 4090 4097 4176 10377 10698 10622 10554
Average total assets 2811 2561 2404 2330 7200 7550 8292 8476
Asset turnover ratio 1.48 1.60 1.70 1.79 1.44 1.42 1.28 1.25
Profitability ratio
Operating profit 762 759 827 866 162 156 253 584
Sales 4167 4090 4097 4176 10377 10698 10622 10554
Operating profit ratio 18% 19% 20% 21% 2% 1% 2% 6%
Net profit 590.4 591.8 635 666 37 29 115 404
Sales 4167 4090 4097 4176 10377 10698 10622 10554
Net profit ratio 14% 14% 15% 16% 0% 0% 1% 4%
2