Report | Comparison Of NEXT Plc & Morrison | Profitability, Liquidity

Added on -2020-02-05

| 14 pages| 2058 words| 80 views

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Business Research and Decision Making
Table of ContentsBusiness Research and Decision Making........................................................................................1INTRODUCTION...........................................................................................................................3TASK...............................................................................................................................................3Analyzing the ratios of Next plc in against to competitors such as Morrison.............................3Discussing the limitations of ratio analysis...............................................................................10RECOMMENDATIONS...............................................................................................................11CONCLUSION..............................................................................................................................12REFERENCES..............................................................................................................................13
INTRODUCTION In the present times, each business organization prepares financial statement for gettinginformation about the extent to which financial strategies prove to be successful. Hence,financial statement analysis tool helps company in making highly effectual business decisionswhich in turn aid in growth, development and profit margin of firm. The present report is basedon Next Plc which is one of the leading retail business organizations of UK. In this, report willshed light on the profitability, liquidity and solvency aspect of Next Plc over the years and incomparison to Morrison. TASK Analyzing the ratios of Next plc in against to competitors such as Morrison Ratio analysis may be defined as a form of financial statement analysis which in turnhelps in getting quick indication about the monetary health and performance of company. It ishighly significant which in turn helps company in evaluating its financial position in against tocompetitors (Financial Ratio Analysis, 2016). Hence, by considering the outcome of ratioanalysis business unit can develop strategic framework for the near future. Ratio analysis of Next Plc and Morrison for the year of 2015 and 2016 is enumerated below:ParticularsFormulasNext PlcMorrison’s2015201620152016Profitability ratiosGross profit(GP)13431453761617Net profits (NP)635667-22
7612Operating profit(OP)803873-909242Sales revenues400041771681616122Gross profitmargin(GP / Total sales) * 10033.58%34.79%4.5%3.8%Net profitmargin (NP)(NP / Total sales) * 10015.88%15.97%-4.53%1.38%operating profitmargin (OP)(OP / Total sales) * 10020.08%20.90%-4.1%1.9%Liquidity ratiosCurrent assets(CA)1616164214441308currentliabilities (CL)887117122732747Inventory417487658616Prepaidexpenses90868882Current ratio(CA / CL)1.821.40.50.48Quick ratio/acid(Current assets – (stock +1.250.9.18.22

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