Analysis and Evaluation of Financial Performance (M&S Plc)

This report provides a comprehensive analysis and evaluation of Marks and Spencer Plc's financial performance over a ten-year period. The study employs a quantitative research strategy, utilizing secondary data extracted from the company's financial statements. The core of the analysis revolves around the application of ratio analysis to assess key financial aspects, including profitability, liquidity, and business efficiency. The report begins with an introduction that provides the background of the company and sets the research aims and objectives. A literature review explores relevant concepts like working capital management and its impact on firm performance, along with an overview of Marks and Spencer. The methodology section details the research philosophy, variable definitions, data collection methods, and analytical procedures. The findings are presented with the help of graphs and charts. The report aims to identify financial strengths and weaknesses, and it concludes with a summary of the findings and implications for Marks and Spencer's financial strategies, especially in the context of recent financial downturns. The analysis also considers the impact of working capital management on the company's performance.

Running head: ANALYSIS AND EVALUATION OF FINANCIAL PERFORMANCE
Analysis and Evaluation of the Financial Performance
(Marks and Spencer Plc)
Name of the Student
Name of the University
Author’s Note

1ANALYSIS AND EVALUATION OF FINANCIAL PERFORMANCE
SIGNED DECLERATION
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Signature:
Date:

2ANALYSIS AND EVALUATION OF FINANCIAL PERFORMANCE
ABSTRACT
Analysis and evaluation of the financial performance of a company is considered as an important
process for the assessment of overall financial performance. In addition, this process helps in the
formation of effective financial strategies of the business organization. The main purpose of this
research is to analyze and evaluate the financial performance of Marks and Spencer for past ten
years. This will be done by analyzing the financial information of the company with the tool of
ratio analysis. For this research, the researcher will adopt the strategy of quantitative analysis. In
this process, the researcher will acquired secondary data from the financial statements of Marks
and Spencer. After the collection of secondary data, they will be analyzed in Microsoft Excel.
With the help of Microsoft Excel, the analyzed and evaluated data will be presented in the forms
of graphs and charts.
Keywords: Marks and Spencer, financial performance, profitability, liquidity, efficiency

3ANALYSIS AND EVALUATION OF FINANCIAL PERFORMANCE
ACKNOWLEDGEMENT
Conducting this research has been the most enriching experiences of my life. The contribution of
this research to increase my knowledge base and analytical skill has been significant. It has given
me the opportunity to face challenges in the process and overcome them. This would not have
been possible without the valuable guidance of my professors, peers and all the people who have
contributed to this enriching experience. I would like to take this opportunity to thank my
supervisor ----------------------- for the constant guidance and support provided to me during the
process of this research. It would not be justified if I did not thank my academic guides for their
important and valuable assistance and encouragement throughout the research process. I would
also like to thank my friends who had provided me with help and encouragement for collecting
secondary data and valuable resources. The support of all these people has been inspiring and
enlightening throughout the process of research in the subject.
Heartfelt thanks and warmest wishes,
Yours Sincerely

4ANALYSIS AND EVALUATION OF FINANCIAL PERFORMANCE
Table of Contents
1.0 INTRODUCTION.....................................................................................................................6
1.1 Background............................................................................................................................6
1.2 Research Aim and Objectives................................................................................................8
1.3 Rationale................................................................................................................................8
1.4 Scope and Limitations...........................................................................................................9
1.5 Project Outline.......................................................................................................................9
2.0 LITERATURE REVIEW........................................................................................................10
2.1 Introduction..........................................................................................................................10
2.2 Impact of Working Capital Management on the Performance of Firms.............................10
2.3 Overview of the Company...................................................................................................12
2.4 Importance of Performance Measurement...........................................................................13
2.4.1 Non-Financial Performance..........................................................................................14
2.4.2 Financial Performance..................................................................................................15
2.5 Ratio Analysis......................................................................................................................15
2.6 Summary..............................................................................................................................17
3. METHODOLOGY....................................................................................................................18
3.1 Introduction..........................................................................................................................18
3.2 Research Philosophy............................................................................................................18

5ANALYSIS AND EVALUATION OF FINANCIAL PERFORMANCE
3.3 Variable Definition and Measurement.................................................................................23
3.4 Sample Selection and Data Collection................................................................................24
3.5 Analytical Procedure...........................................................................................................26
3.6 Ethical Issues.......................................................................................................................27
3.7 Summary..............................................................................................................................27
4.0 CONCLUSION........................................................................................................................29
References......................................................................................................................................30

6ANALYSIS AND EVALUATION OF FINANCIAL PERFORMANCE
1.0 INTRODUCTION
1.1 Background
The analysis and evaluation of the financial performance of the companies is considered
as one of the major factors in today’s business world. In today’s changing business world, it is
essential for the business organizations to perform in a consistent good way in order to stay in
the competition. In this aspect, the analysis and evaluation of the financial performance of the
companies is an important aspect (Higgins 2012). The analysis and evaluation of financial
performance refers to the process of the identification of financial strateghts and weaknesses of
the companies. At the time of analyzing and evaluating the financial performance of the
companies, it is required to consider the major financial statement of the companies like balance
sheet, statement of profit and loss, statement of cash flows and others (Baird, Geylani and
Roberts 2012). All these financial statements are important for acquiring necessary financial
information about the companies (Almazari 2012). In this context, it needs to be mentioned that
many tools are there for the analysis and evaluation of financial performance. One of those major
tools is Ratio Analysis (Brigham and Ehrhardt 2013). This particular research aims to analyze
and evaluate the financial performance of Marks and Spencer Plc for ten years. Marks and
Spencer is a major British multinational retailer and the company has its operations spread all
over the world. The research is based on the analysis and evaluation of the financial performance
of Marks and Spencer Plc for ten financial years. In the recent financial crisis all over the world,
the financial performance of the companies are largely affected. Thus, it is required for all the
companies to analyze and evaluate their financial performance for the identification of the strong
and weak financial areas (Bodie, Kane and Marcus 2014). With the help of this analysis and

7ANALYSIS AND EVALUATION OF FINANCIAL PERFORMANCE
evaluation, it become possible for the companies to develop effective financial as well as non-
financial strategies to strengthen the weak areas (Sheela and Karthikeyan 2012). This same
concept is also applicable for Marks and Spencer Plc. In the recent years, it has been seen that
the company has become affected due to the world financial downturn.
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
0
100
200
300
400
500
600
700
800
900
660
822
508 526
612
513 454
524 487
406
Net Income (£m)
Net Income (£m)
Figure 1: Net Income of Marks and Spencer
(Source: corporate.marksandspencer.com 2017)
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
0
0.2
0.4
0.6
0.8
1
1.2
0.4
0.97000000000
0001
0.65000000000
0002
0.66000000000
0003
0.77000000000
00020.64000000000
00020.56
0.64000000000
00020.59
0.49
Earnings Per Share (£)
Earnings Per Share (£)

8ANALYSIS AND EVALUATION OF FINANCIAL PERFORMANCE
Figure 2: Earnings per Share of Marks and Spencer
(Source: corporate.marksandspencer.com 2017)
For this reason, it is essential for the company to know the financial aspects where they are
lagging in respect of their major competitors. This study will be helpful for the formulation of
effective financial and non-financial strategies to revive the financial condition of the company
(Ameer and Othman 2012). In this research, the researcher will use specific statistical tool for the
analysis and evaluation of the performance of the recent performance trend of Marks and
Spencer Plc.
1.2 Research Aim and Objectives
Major aim of the research is to analyze and evaluate the financial performance of Marks
and Spencer Plc for a period of 10 years. In addition, there are some major objectives for
achieving the overall goal of the research. They are as follows:
 The first objective is to analyze and evaluate the profitability position of Marks and
Spencer Plc.
 The second objective is to conduct an analysis and evaluation on the liquidity position of
Marks and Spencer Plc.
 The last objective is to analyze and evaluate the business efficiency of Marks and
Spencer Plc.
1.3 Rationale
The aim of the research is to analyze the financial performance of Marks and Spencer Plc
for ten years. With the help of this, it will be possible to identify the financial areas where the
company needs improvement. As a result of this, it will be possible to develop effective financial

9ANALYSIS AND EVALUATION OF FINANCIAL PERFORMANCE
strategies for the revival of the financial situation of Marks and Spencer Plc. Thus, in order to
develop effective strategies, it is required to carry on the research. In addition, this research will
be helpful for the researchers who want to work on this particular subject. This paper will work
as a guide for them.
1.4 Scope and Limitations
There are certain boundaries of this research. The above part shows that the researcher
will take the help of secondary data in order to measure the performance of Marks and Spencer.
It implies that there is not any scope of the collection of primary data for this research. There are
many instances where secondary data fail to reflect the original financial condition of the
business organizations. Thus, not collecting primary data can be considered as a limitation of this
research.
1.5 Project Outline
The research has four major areas. They are Introduction, Literature Review,
Methodology and Conclusion. The introduction part will have sections like background, aim and
objective, rationale and others. The literature review will have the discussion of major theories,
papers, litterateurs and others. The methodology part will include the description of processes for
the research. The conclusion part will have the summary of the total research paper.

10ANALYSIS AND EVALUATION OF FINANCIAL PERFORMANCE
2.0 LITERATURE REVIEW
2.1 Introduction
Literature Review is a crucial part in the research process (Ridley 2012). In this research
program, the researcher will analyze and evaluate the financial information of Marks and
Spencer in order to analyze their financial performance for last ten years. The first part of
literature review provides the overview of the research. After that, the impact of capital
management on the businesses is discussed. After that, the overview of Marks and Spencer is
provided. The next parts discuss about importance of performance measurement, non-financial
performance and financial performance of the business organizations. Lastly, a summary is
provided.
2.2 Impact of Working Capital Management on the Performance of Firms
Working Capital Management refers to the process of managing various components of
working capital in the business organizations. In the business organizations, it can be observed
that working capital management mainly deals with two major aspects; they are current assets
and current liabilities (Agha 2014). In the business organizations, there are two major objectives
of working capital management. The first objective is to increase the profitability of the business
organizations and the second objective is to bring improvements in the liquidity position of the
firms. Improvement in firm’s profitability and liquidity are two of the significant factors for the
companies and thus, working capital management has paramount importance in improving the
performance of the companies (Aktas, Croci and Petmezas 2015).
In this context, there are many benefits of having an effective working capital
management within the organizations. Effective working capital management helps the

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business organizations in the reduction of opportunity costs associated with investments in
inventories, accounts receivables and holding cash. With the help of effective working capital
management, instead of excess fund investments, companies can use the funds to pay the debts
or can return them to the shareholders in the forms of dividends or repurchase of shares (Bagchi,
Chakrabarti and Roy 2012). After that, working capital management helps in the management of
accounts receivables days.
In the companies, higher accounts receivables day indicates that the company is facing
trouble in collecting cash from their debtors (Michalski 2012). In the presence of effective
working capital management, organizational managers become able to keep eye on different
aspects of working capital so that the performance of the companies can be increased. In this
context, there are some major components of working capital management that create impact on
the performance of the companies (Michalski 2012). They are inventory conversion period;
average receivable collection period, average accounts receivable period, average accounts
payable period and cash conversion circle (Baños-Caballero, García-Teruel and Martínez-Solano
2014). All these components need effective management in improving the firm’s performance.
Inventory refers to the company’s stock of raw materials, work-in-progress and finished
goods. With the help of effective working capital management, organizational managers become
able to main optimal level of inventory in order to avoid major potential losses in the value of
assets. This particular aspect helps in increasing the profitability of the organizations. In addition,
rapid inventory turnover helps in the reduction of price concessions and obsolescence (Barine
2012).

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Average accounts payable refer to the time taken by the companies for paying their
trade payables. Organizational manager can establish a balance between average accounts
payable and average accounts receivable in the presence of effective working capital
management (Lind et al. 2012). Cash conversion cycle is the time in which the companies make
payments for their raw materials and receive payments for their finished goods (Bhattacharya
2014). Various strategies related to working capital management helps in reducing the time of
cash conversion cycle in order to increase the profitability of the companies. Thus, from the
above discussion, it can be seen that working capital management helps in improving the
performance of the companies by managing inventories in an effective way; maintaining a
balance between days of accounts revisable and accounts payable; and minimizing the time of
cash conversion cycle (Kieschnick, Laplante and Moussawi 2013).
The facts discussed about working capital management in the above discussion are also
applicable for Marks and Spencer. The company also has to deal with the major components of
working capital like inventories, finished and work-in-progress goods, accounts receivable,
accounts payable and others. The implementation of effective working capital management will
help Marks and Spencer in the effective management of their inventories (Mathuva 2015). Marks
and Spencer is one of the major retail companies in United Kingdom. For this reason, the
company has to deal with large amount of inventories, accounts receivable and payable. It can be
observed that effective working capital management has been one of the major reasons for the
financial success of the company. However, there is always opportunity for improvements. The
implementation of all the aspects of working capital management will make the company able to
improve their liquidity position along with their profitability position.

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2.3 Overview of the Company
Marks and Spencer is one of the major British multinational retailers. The company was
founded in the year of 1884; and the name of the founders are Sir Michael Mark and Thomas
Spencer (corporate.marksandspencer.com 2017). The headquarter of the company is at London,
United Kingdom. It needs to be mentioned that Marks and Spencer has more than 1800 stores all
over the world. In the business operations of Marks and Spencer, two major segments can be
seen; they are United Kingdom (UK) market and international market. The major components of
UK market of Marks and Spencer are UK retail businesses and franchise operations
(corporate.marksandspencer.com 2017). On the other hand, the major components of
international market are the businesses of Marks and Spencer in Ireland, Europe and Asia with
various international franchise operations. The main business operations of Marks and Spencer is
to deliver own brand of food, home products and clothing in both online and offline throughout
UK and internationally (corporate.marksandspencer.com 2017). The company has an employee
base of around 84,000. In addition, the company also sells various kinds of products like women
wear, lingerie, menswear, kidswear and different kinds of home products. Thus, it can be said
that Marks and Spencer is a major name in the retail market of all over the world.
The above discussion shows that Marks and Spencer operates in the retail industry of
United Kingdom. The retail industry of United Kingdom is a large industry as it contributes
almost 5% towards the GDP. In the year 2016, total value of UK retail industry was £358 billion
and almost 2.8 million people are employed in the UK retail industry. In the year 2016, 3.4% rise
was registered in UK retail sales. Many large and small organizations operate in UK retail
industry. Thus, the major competitors of Marks and Spencer are Next Plc, Asda Group Limited,
Tesco Plc, Sainsbury’s and others (retaileconomics.co.uk 2017).

14ANALYSIS AND EVALUATION OF FINANCIAL PERFORMANCE
2.4 Importance of Performance Measurement
Performance measurement has major importance for the business organizations. The
major importance of company’s performance measurement is discussed below:
Performance measurement helps the companies to improve profitability by two ways. First, it
reduces the process cost of the business; and second, it helps in improving productivity of the
company (Zairi 2012). Various performance measurement activities help the companies in the
alignment of strategic activities with the strategic plans. With the help of effective performance
measurement activities, organizational managers become able to identify the best practices for
their businesses. By implementing effective performance measurement policies, organizational
managers can benchmark the financial performance of their companies with the outside
companies (Santos and Brito2012). Performance measurement helps the organizations to gather
crucial data from various past projects so that they can be helpful for the future projects of the
companies. Organizational managers are able to take better budgetary decisions with the help of
effective performance measurement techniques. In addition, measuring financial performance of
the companies helps in the implementation of effective internal control for them (Wang and
Wang 2012). Lastly, performance measurement provides the companies in measuring the overall
effectiveness of their organizations so that effective strategies can be made.
2.4.1 Non-Financial Performance
Achieving non-financial performance goals has become major objectives for the retail
industries of UK. It can be seen that nearly three-quarter of the products of UK retail companies
are eco-friendly or ethical in quality. In the recent years, it has become necessary for the retail
companies to disclose all the details about their corporate governance and sustainability activities
with the help of sustainability reports. Some of the major non-financial areas that the companies

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are required to disclosure are the reduction in retail food waste, savings in energy, savings in
water, carbon reduction and many others areas. Most of the retail companies publish information
regarding their non-financial performance with the help of integrated reporting as integrated
reporting helps in disclosing this information in a proper manner. It has also been seen that many
companies in UK retail industry are introducing different sustainability plans as a part of their
non-financial performance.
2.4.2 Financial Performance
For the retail companies in UK, it is required to present the information about their
financial performance. It has been seen that all the companies in UK retail industry publish their
financial statements on a yearly basis. The companies provide their financial information with
the help of some major financial statements; they are consolidated income statement, statement
of comprehensive income, balance sheet, statement of change in equity and statement of cash
flows. Companies provide notes about their financial statements. They prepare their financial
statements based on the principles and standards of International Financial Reporting Standards
(IFRS). In addition, they also follow the regulations of Companies Act 2006.
2.5 Ratio Analysis
Ratio Analysis refers to refers to a major financial tool that helps in the measurement of
company’s operating as well as financial performance such as profitability, liquidity, efficiency
and others (Browne, O'Regan and Moles 2012). The major benefits and limitations of ratio
analysis are discussed below:
Benefits: Ratio analysis is useful for assessing the company’s financial position. In addition, it
helps in bringing operational efficiency in the organizations. Information obtained from ratio

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analysis is used for financial forecasting. Apart from this, ratio analysis can be used for
comparing financial performance of the companies with other companies (Spiceland et al. 2013).
Limitations: Sometimes financial statements of the companies suffer from various limitations
and this reason leads to the inappropriate results of ratio analysis as they are done based on the
information from financial statements. In addition, the use of historical information in ratio
analysis is another limitation. Thus, change in current price level does not reflect on the results of
ratio analysis (Healy and Palepu 2012).
For this research program, the researcher will consider three types of ratios; they are
Profitability ratios, Liquidity ratios and Efficiency ratios. They are discussed below:
Profitability Ratios: The analysis of profitability ratios is crucial to compare various accounts
of income statements in order to show the profit generation ability of the companies. The major
ratios under this are gross profit ratio, net profit ratio, return on investments and return on equity.
Strong profitability ratios indicate that the companies are able to turn their various business
activities into profits. In case of Marks and Spencer, it can be observed that the recent
profitability position of the company has not been good. Stability is there in gross margin, but in
case of net profit margin, a decreasing trend can be seen. The same decreasing trend can be
observed in return on equity and return on investment due to the company’s disability to fetch
return from investment and equities. On an overall basis, it can be said that the current
profitability position of Marks and Spencer is not effective.
Liquidity Ratios: Another crucial aspect is liquidity analysis. With the help of liquidity ratios,
investors are able to judge the company’s ability to pay off their long-term and short-term
business obligations. The major ratios under this are quick ratio, current ratio, times interest

17ANALYSIS AND EVALUATION OF FINANCIAL PERFORMANCE
earned ratio and others. Good liquidity ratios indicate that the company has enough liquid assets
to meet their current obligation. In case of Marks and Spencer, it can be observed that the
liquidity position of the company is good as per the retail industry average. According to the
annual report of Marks and Spencer, both current ratio and quick ratio is stable that indicates
good liquidity position. In the initial years, Marks and Spencer used to issues equity share for
raising capital. However, in the recent years, the company has become dependent on both equity
and debts for raising required capital.
Efficiency Ratios: In addition, efficiency ratio analysis shows the ability of the companies in
generating income by using the resources and assets of them. The major ratios under this are
accounts receivable turnover, working capital ratio, asset turnover ratio, inventory turnover and
others. Good efficiency ratios are the indicators of the company’s ability to use its assets in
generating revenues. The efficiency position of Marks and Spencer has not been in the recent
years. An increasing trend is there in the days of inventory as well as treads payable. It implies
that Marks and Spencer is not able to clear its inventories in time. This particular aspect is
affecting the cash conversion cycle of the company. Thus, it is required for Marks and Spencer to
develop effective financial strategies for improving their efficiency position.
2.6 Summary
From the above discussion, it can be seen that performance measurement helps the
business organizations from different ways. The above discussion shows that the current
financial performance of Marks and Spencer is not effective. However, the company is making
improvements in their non-financial performance. From the above discussion, it can also been
seen that ratio analysis is a major financial tool for measuring the financial performance of the
companies. At the same time, organizational managers need to consider the limitations of ratio

18ANALYSIS AND EVALUATION OF FINANCIAL PERFORMANCE
analysis. The above discussion also shows that the current profitability and efficiency position of
the company is not good. However, the liquidity position of Marks and Spencer is effective.

19ANALYSIS AND EVALUATION OF FINANCIAL PERFORMANCE
3. METHODOLOGY
3.1 Introduction
Research methodology is considered as a major part of any research or study. The
portion of research methodology contains the description about the techniques to lead and
execute the whole research (Mackey and Gass 2015). In this concept, it needs to be mentioned
that certain philosophy and science work behind the development of research methodology.
Research methodology provides a specific director to the researcher for the completion of the
whole research process.
3.2 Research Philosophy
Research philosophy helps in the improvements of knowledge about different
kind of information for the completion of the research. Two types of research philosophies can
be seen; they are Ontology and Epistemology.
Ontology: Ontology considers the reality of the research. With the help of this, the researchers
can support the research issues with scientific reasons. It needs to be mentioned that there are
two parts of ontology; they are Objectivism and Subjectivism (Goertz and Mahoney 2012).
Objectivism: The philosophy of objectivism states that the social bodies exist in the reality.
Management of the companies can be considered as an example as the management chooses to
accept the objectivist position in the organizations.
Subjectivism: According to the subjectivism philosophy, judgments make the social marvels that
ensure the activities of the social system (Goertz and Mahoney 2012).

20ANALYSIS AND EVALUATION OF FINANCIAL PERFORMANCE
Thus, it is justified to use objectivism philosophy for this research as this research aims to
collect financial information for the analysis and evaluation of organizational financial
performance. The reason is that the acquired financial data can be properly examined and
certified for the accuracy of the research.
Epistemology: Epistemology is mainly concerned with the logic of different acknowledgements
for substantial learning (Davies 2013). In a more specific manner, this philosophy helps in
establishing relationship between the researcher and the subject of the investigation. The major
two parts of epistemology are Positivism and Interpretivism.
Positivism: Positivism research philosophy is similar to those philosophies used in various
aspects of physical and natural science. In addition, it can also be considered as a vastly
structured method that is employed for simple duplication. All over the world, vast use of
positivism research philosophy can be seen (Davies 2013).
Interpretivism: This particular research philosophy can be related to the supporters of the
requirements for the recognition of transformation among the humans as a role of their social
factor.
In this particular research, the researcher will adopt the strategies of positivism
epistemology philosophy. The main reason of this selection is that this paper is based on the
collection of different kinds of financial information from various financial statements of Marks
and Spencer for measuring the financial performance of them. In addition, others can verify the
results of the ratio analysis. In addition, as the research is general, further analysis on the same
financial data of the company will generate the exact same result. For these particular reasons, tis
specific research philosophy will be implemented.

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Research Approach is considered as major factors for the success of any research
program. Research approach refers to the process in which the research will be carried on so that
all the research objectives cab met. In general, two types of research approaches can be seen.
They are Inductive approach and Deductive approach. These two aspects are discussed below:
Inductive Approach: Inductive research approach is based on the empirical evidence. In this
approach, all the assumptions of the research are done based on empirical observation of data.
Under this research approach, first, all the procedures are arrived from empirical observation;
second, the discoveries are done; and third, the major theory is constructed based on the outcome
of the whole research process (Smart, Witt and Scott 2012).
Figure 4: Inductive Approach
(Source: Smart, Witt and Scott 2012)
Deductive Approach: Deductive research approach is fully based on logical sequences and
meanings. Thus, the overall conclusion of research under deductive approach is drawn based on
the reasonable rationales that are based on logic. For this reason, this particular approach can be
considered as a part of empirical study and it can be properly acknowledged.
Figure 5: Deductive Approach

22ANALYSIS AND EVALUATION OF FINANCIAL PERFORMANCE
(Source: Yilmaz 2013)
Thus, the above discussion shows various components of both deductive and inductive
research approach. Based on the above discussion, it can be concluded that the researcher will
adopt the strategy of inductive research approach for this particular research process. The reason
is that this research includes the analysis and evaluation of the financial data of Marks and
Spencer from their different financial statements. Hence, the first step includes the analysis of
financial data in order to get major findings. In the next stage, theory will be made by analyzing
the financial performance of the company. For all these reasons, inductive approach will be
optimal for this research.
While continuing various research operations, the researcher is required to select the sorts
and blends of the research structure that is helpful for achieving the objectives of the research. In
general, two types of research strategies can be seen; they are Quantitative research and
Qualitative research.
Quantitative Research: This strategy refers to the kinds of research programs that are based on
positivism methodological standards for quantitative measurement. After that, various statistical
operations are done (Czanderna 2012).
Qualitative Research: This kind of research programs takes into consideration the
methodologies considering different kinds of theoretical standards, various phenomelogy,
hermeneutics and different social interactionism. This strategy uses different techniques for
accumulation and investigation of information that are non-quantitative in nature. Thus, it can be
seen that there are many differences between quantitative and qualitative research (Sgier 2012).

23ANALYSIS AND EVALUATION OF FINANCIAL PERFORMANCE
Figure 3: Difference between Quantitative and Qualitative Research
(Source: Allwood 2012)
For this particular research, the most suitable research strategy will be the
implementation of quantitative strategy. In this research process, the researcher will deal with
large amount of financial information from various financial statements of the company. Thus, it
can be seen that the research mainly deals with the analysis and evaluation of financial data from
the financial statements of Marks and Spencer. In this research, no attempt will be take for the
analysis of different theories, research papers, articles, literature reviews and others. Thus, for all
these reasons, quantitative research strategy will be selected for this research.
Research design refers to the outline for achieving the main goals and objectives of the
research. In a more board sense, research design is considered as an end-all strategy that refers to
the specific system and strategies for the acquisition of the required data for the research. With
the help of the implementation of effective research design, the researcher can establish control

24ANALYSIS AND EVALUATION OF FINANCIAL PERFORMANCE
on the overall research program (Maxwell 2012). It needs to be mentioned that there are three
kinds of research designs; they are exploratory research design, descriptive research design and
casual research design. It needs to be mentioned that the main aim of this research is to obtain
financial data of Marks and Spencer for measuring the financial performance of the company. As
a part of the research design, the researcher will analyze various financial statements of Marks
and Spencer so that required financial data can be obtained. For this reason, it is required for the
reserahcr to study various financial related news and articles of Marks and Spencer along with
the study of various financial statements (Yin 2013). This is considered as a process of
investigating and appraising the real life incidents and case about the organizations. This will be
the design of this research.
3.3 Variable Definition and Measurement
Variables are the characteristics or attributes of an organization or individuals that can be
observed or measured and different among them can be identified. The major variables of this
research are shown below:
Profitability Ratios
Net Profit Margin ¿ Profit before tax∧lon−Term interest
Sales
Gross Profit Margin ¿ Gross Profit
Sales
Liquidity Ratios
Current Ratio ¿ Current assets
Current liabilities

25ANALYSIS AND EVALUATION OF FINANCIAL PERFORMANCE
Quick Ratio ¿ Current assets−Inventory
Current liabilities
Efficiency Ratio
Inventory Days ¿ Average inventory
Cost of goods sold ×365
Trade Receivable Collection Period ¿ Trade debtors
Credit sales × 365
Trade Payable Payment Period ¿ Trade creditors
Credit purchases ×365
3.4 Sample Selection and Data Collection
The implementation of proper sampling process helps the researchers to
reduce the amount of collected data by concentrating on a specific sample of data from the whole
population. Two types of sampling procedures can be seen; they are Probability sampling and
Non-probability sampling.
Probability Sampling: This sampling process is also called random sampling. In this sampling
technique, the researchers give all units of the population the same chance for being selected in
the lucky draw. In this process, four kinds of divisions can be seen; they are simple random
sampling, systematic random sampling, stratified random sampling and cluster sampling
(Ritchie, Lewis and Elam 2013).
Non-Probability Sampling: This process is also called non-random sampling. This is an
effective process while using pilot research study consists of sensitive questions. Some of the
major components of non-probability sampling are quota, snowball, focus group and others
(Baker et al. 2013).

26ANALYSIS AND EVALUATION OF FINANCIAL PERFORMANCE
Based on the above discussion, it can be concluded that the researcher will adopt the
process of stratified sampling as attributes of the study determine the variables of the research.
For this reason, it will be suitable to implement the strategy of random sampling as the research
will help the researcher to make measurable implications of performance measurement.
The collection of necessary data is considered as an integral part of any research
process as the success of the research vastly depends on the collection of appropriate data. In this
regard, it needs to be mentioned that there are two main approaches for obtaining information for
the research problems. They are Primary data collection and Secondary data collection.
Primary Data Collection: Primary data are collected from different kinds of original sources like
own experiments of the researchers, different kinds of surveys, interviews of the focus groups
and others (Best and Kahn 2016).
Secondary Data Collection: This is the kind of process where the researchers do not gather data
for themselves straightforwardly. Thus, secondary data are collected from various other sources
like previously done researches, journals, articles, news paper articles, website of the companies,
annual reports of the companies and others. There are two major aspects of secondary data; they
are the discoveries of secondary data and the process to use them (Palinkas et al. 2015).

27ANALYSIS AND EVALUATION OF FINANCIAL PERFORMANCE
Figure 6: Primary and Secondary Data Collection
(Source: Best and Kahn 2016)
Based on the above discussion, it can be concluded that the researcher will collect
secondary data for the completion of this research. More specifically, it needs to be mentioned
that the researcher will acquire necessary financial data from the financial statements of Marks
and Spencer. One major advantage of secondary data is that they can be easily analyzed. After
the analysis, they can be easily compared and people can easily understand the analysis and
evaluation of secondary data.
3.5 Analytical Procedure
For the analysis and evaluation of the financial performance of Marks and
Spencer, the researcher will adopt the strategy of ratio analysis. The process of ratio analysis will
be helpful for the measurement of the financial performance of Marks and Spencer and this
process will be helpful for the prediction of future financial shortcomings of the company. In this
particular process, the extracted secondary information from the financial statements of Marks
and Spencer will be oversee, assessed so that they can be changed into crucial financial
information with the assistance of quantitative examination procedures (Thomson and Emery
2014). After the collection of secondary data, they will be put into Microsoft Excel so that they
can be presented in the form of charts and graphs. There are different kinds of ratios that are
helpful for measuring the financial performance of companies. However, the wheels of business
rely upon on three major aspects (Schabenberger and Gotway 2017). They are profitability
position, liquidity position and efficiency position. After the implementation of ratio analysis, the
researcher will adopt another technique for performance measurement. That is Trend analysis.

28ANALYSIS AND EVALUATION OF FINANCIAL PERFORMANCE
Trend Analysis: It is considered as another major technique for measuring the performance of
the company. It is considered as a simple process for performance measurement as the tread in
the ratios are measured for performance measurement of the companies. For this analysis, the
ratios will be analyzed based on ten financial years. Trend analysis helps in predicting future
shortcomings of the companies (Schabenberger and Gotway 2017).
3.6 Ethical Issues
While carrying on the research process, the researcher is required to deal with every kind
of moral issues so that interest and privileges of the included persons by the work are protected.
At the time of collecting the required secondary data for the research, it is required for the
researcher to consider the trustworthiness and quality of obtained data. For this reason, it is
important to consider a well known company as information from companies that are not known
by anyone can set up false image of the research. In addition, many other ethical issues are
required to be considered by the researcher. It is required for the researcher to maintain the
needed confidentiality of collected data. In addition, the data analysis process of the research is
required to be free of biasness in order to get favorable output of the research.
3.7 Summary
At the time of carrying on the research, it is required for the researcher to adopt some
specific approaches. The above discussion shows that the researcher will adopt objectivism
ontological philosophy with positivism epistemology along with the implementation of inductive
research approach. All the data will be collected from secondary sources and they will be
analyzed and evaluated with the help of ratio analysis along with trend analysis (Miller et al.
2012). In this process, the researcher will adopt the strategies of quantitative analysis. Apart from

29ANALYSIS AND EVALUATION OF FINANCIAL PERFORMANCE
this, the adopted sampling process will be stratified random sampling. After the analysis, they
will be presented through graphs and charts with the help of Microsoft Excel.

30ANALYSIS AND EVALUATION OF FINANCIAL PERFORMANCE
4.0 CONCLUSION
From the introduction part of the research, it can be seen that the main aim of this
research is to analyze and evaluate the financial performance of Marks and Spencer Plc. It has
been seen that the recent financial performance of Marks and Spencer is not good. For this
reason, it is important to analyze and evaluate the financial performance of Marks and Spencer in
order to develop effective financial strategies. As per the above discussion, three major
objectives of this research are to analyze the profitability, liquidity and efficiency of Marks and
Spencer. The literature review portion of this research includes the analysis of some major
literatures regarding working capital management, financial performance, non-financial
performance and others. The literature review part of the research states that there are three
major components of working capital management of the companies; they are accounts
receivable management, accounts payable management and inventory management. From the
same part, it can be observed that there are some major reasons for the companies to measure
their financial performance like to develop strategies, assess the financial position of the
company and others. The above part also shows that Marks and Spencer has taken many
initiatives in order to boost their non-financial performance. However, the financial performance
of the company is not very good. From the methodology part of the study, it can be seen that the
researcher has developed a well-structured methodology to carry on different activities of
research. The above discussion shows that the researcher will collect secondary data as the form
of financial data. Data will be collected from the financial statements of Marks and Spencer.
After the collection of data, they will be analyzed with the help of ratio analysis. After the
analysis, they will be presented in the form of charts, graphs and tables.

31ANALYSIS AND EVALUATION OF FINANCIAL PERFORMANCE

32ANALYSIS AND EVALUATION OF FINANCIAL PERFORMANCE
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