Financial Analysis: Dunelm Plc and Halfords Group Plc (2016-2017)

This report offers a comparative financial analysis of Dunelm Group Plc and Halfords Group Plc, focusing on their financial performance between 2016 and 2017. The analysis delves into profitability ratios, including net margin, asset turnover, return on equity, and return on investment capital, revealing Dunelm's superior operational performance and profitability. Liquidity ratios, such as current ratio, quick ratio, financial leverage, and debt/equity, are examined to assess the firms' abilities to meet short-term and long-term debts, with Dunelm displaying stronger financial leverage. Efficiency ratios, encompassing payable period, inventory turnover, fixed asset turnover, and asset turnover, are also scrutinized, highlighting Halfords' advantage in payable periods while Dunelm excels in inventory turnover. The conclusion suggests that Dunelm Group Plc is a more favorable investment due to its profitability and revenue generation capabilities, supported by cited references. This analysis is designed to help students understand financial statement analysis and company performance comparison.

TASK 2

INTRODUCTION
Analysing the financial resources there is need of having the
authenticated sources and the relevant data which in turn
helps the organisation in making appropriate decision
making. Thus, this presentation will reflect comparison of the
financial analysis of Dunelm Plc and Hlafords Group Plc.

PROFITABILITY RATIOS
Dunlem Group plc Halfords Group plc
Profitability
ratio
2016 2017 2016 2017
Net margin 11.61 7.65 6.22 5.15
Average
Asset
turnover
2.56 2.45 1.46 1.48
Return on
equity
99.97 69.72 16.43 13.88
Return on
investments
capital
53.09 33.6 14.2 12.06

INTERPRETATION
 In accordance with the net margin Dunlem Group Plc is having
better operational performance or revenue gathering than Halfords
Group plc.
 The profitability of Dunlem Group Plc is more than Hlfords Group
Plc. Thus, it can be said that the organisation is capable of reducing
costs as well as having the adequate sales revenue.
 Investors of Dunlem plc will be beneficial as organisation have
adequate return over their equity so they will make fruitful dividend
payment.

LIQUIDITY RATIO
Liquidity
ratio
2016 2017 2016 2017
Current ratio 1.46 1.5 1.05 1.1
Quick ratio 0.23 0.17 0.19 0.2
Financial
leverage
3.48 3.93 1.74 1.9
Debt/equity 0.95 1.26 0.09 0.2

INTERPRETATION
 In accordance with the liquidity and ability of organisations in
meeting the short term and long term debts there is tough
competition between both the firms.
 In context with financial leverage Dunlem Group Plc is having
strong financial leverage ratios.
 In terms of debt equity both the firms able to meet the debts and
make payments to their shareholders.

EFFICIENCY RATIO
Efficiency
ratio
2016 2017 2016 2017
Payable
period
43.16 49.16 78.78 71.24
Inventory
turnover
3.54 3.54 3.11 3.07
Fixed asset
turnover
5.37 5.25 9.68 10.42
Asset
turnover
2.56 2.45 1.46 1.48

INTERPRETATION
 In terms with the Efficiency ratios Halfords Group Plc are quite
beneficial in having the adequate payable period.
 The asset turnover ratio of Halfords Group Plc is better and adequate
than the Dunlem Group Plc.
 The Inventory Turnover ratio of Dunlem Group Plc is better than
Halfords Group Plc which indicates that this firm is better in
gathering the adequate inventory.

CONCLUSION
On the basis of such financial analysis it can be concluded
that Dunlem Group Plc will be fruitful as per investment
point of view as well as it helps in making the adequate
profitability and best revenue gathering to their investors.

REFERENCES
Zeitoun, M. А. and Mdawar, B. W., 2016. Role of financial
analysis in improving performance in banking industry. An
empirical study on Commercial Bank of Syria. Экономика и
предпринимательство. (3-1). pp.693-699.
Asquith, P. and Weiss, L. A., 2016. Determining a Firm's
Financial Health (PIPES‐A). Lessons in Corporate Finance: A
Case Studies Approach to Financial Tools, Financial Policies,
and Valuation. pp.7-25.
Dunelm Group PLC. 2017. [Online]. Available through
:<http://financials.morningstar.com/ratios/r.html?t=DNLM>.