Kingston MBA: Financial Analysis of JD Sports Fashion PLC Performance

This report provides a detailed financial analysis of JD Sports Fashion PLC, a retailer of sports and fashion ware. It employs ratio analysis, vertical and horizontal analysis, and share price valuation to assess the company's performance. Key financial ratios, including profitability, asset management, liquidity, and investor relations ratios, are examined. The report also calculates the cost of capital, analyzes the capital structure, and reviews share price movements. Recommendations for JD Sports include accepting an acquisition plan, incorporating an expansion plan, reducing operational costs, and improving liquidity. The analysis also refers to an appraisal of Mackays Stores Limited acquisition.

FINANCIAL MANAGEMENT

ANALYSIS OF PERFORMANCE
OF JD SPORTS FASHION PLC
The presentation is focused on providing a detailed analysis of the financial
performance of the business of DP Sports Fashion Plc. The business is
engaged in providing materials for sports as well as fashion products. The
financial performance analysis of a business can be done by following:
 Ratio Analysis
 Vertical and Horizontal Analysis
 Valuation of share prices of business.

ANALYSIS OF KEY FINANCIAL
RATIOS
The key financial ratios which are to be considered for the purpose of
measuring the financial performance of the business are listed below:
 Profitability Ratios
 Asset Management Ratios
 Liquidity Ratios
 Investor’s Relation Ratios

PROFITABILITY AND ASSET
MANAGEMENT RATIO
2013 2014 2015 2016 2017
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
Profitability JD Sports Fashion Plc
Gross profit margin, % EBITDA margin, %
Operation profit margin, % Net profit margin, %
2013 2014 2015 2016 2017
0.00
20.00
40.00
60.00
80.00
100.00
120.00
JD Sports Fashion Plc - Asset Management
Ratios
Debtors days Creditors days DSI

LIQUIDITY AND INVESTOR’S RATIOS
2013 2014 2015 2016 2017
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
1.60
JD Sports Fashion Plc - Current & Quick Ratios
Current Ratio Acid Ratio
2013 2014 2015 2016 2017
0.00
0.10
0.20
0.30
0.40
0.50
0.60
JD Sports Fashion Plc - EPS & DPS
EPS DPS

COST OF CAPITAL
The cost of capital of DP Sports Fashion Plc is computed to be 8.82% as
shown in the calculations. The cost of capital represent the overall risks which
the business faces. In order to keep the risks to a minimum, cost of capital
should be kept at a minimum as well.

CAPITAL STRUCTURE
Capital Structure of a business refers to the mix of capital which is employed
by the business which may be either equity share capital or debt capital as
per the requirement and preference of the management of the company. In
the case of DP Sports, the management uses mostly debt capital as a
financing option.

SHARE PRICE MOVEMENTS

RECOMMENDATIONS
The recommendation which can be provided to DP Sports ltd are listed below:
 Accept the acquisition plan and implement the same.
 Incorporate expansion Plan
 Reduce the operational cost of the business to earn more profits
 Improve the liquidity position of the business.

THANKING YOU