BOB RADCLIFFE FINANCIAL RATIOS ANALYSIS

Bob Radcliffe Financial Ratios Analysis

Table of Content

Introduction3

Company History3

Bob Radcliffe Financial Analysis4

Ratio Analysis4

Financial Risk Ratios5

Profitability5

Market Value Ratios6

Cost-Volume-Profit Analysis6

Contribution Margin6

Contribution Margin Ratio7

Unit Contribution Margin8

Bob Radcliffe Financial management9

Accounting as a Decision making tool11

Business Analysis11

Conclusion12

References13

Appendix14

Bob RadcliffePlc14

Bob Radcliffe Financial Ratios Analysis

Introduction

Bob Radcliffe is engaged in the operation of international and domestic scheduled air services for the carriage of passengers, freight and mail and the provision of ancillary services. The company primarily operates in Europe and the Americas region. The company also has its operations spread across Far East Asia, Australia, Africa, Middle East and the Indian sub-continent. At the end of March 2009, the company had 245 aircraft in service, compared to 242 in March 2007. The company divides its business into two segments: airline business and non-airline business. The company's principal base is the Heathrow International sports, where the company carries an estimated 41% of the sports complex's passengers. In addition, the company has a second base of operations at Gatwick, London. The company operates offices, maintenance hangars, and other support facilities at Heathrow, Gatwick and other UK sports complex. The company also occupies space and desks under lease or license in sports complex throughout the UK including Manchester, Birmingham, Newcastle, Edinburgh and Glasgow.

Bob Radcliffe Financial Analysis

Ratio Analysis

Liquidity & Working Capital Ratio:

2009

2008

Difference

Current Ratio

0.57

0.89

0.324500424

Quick Ratio

0.54

0.86

0.32308863

Inventory Holding Ratio

5.57

5.69

0.123294258

Both quick ratio and current ratio of Bob Radcliffe are decreasing which means that the company is loosing its liquidity every year. It implies that the Bob Radcliffe is not able to pay-off its short term liabilities and its short term debts are increasing. Liquidity ratios of Bob Radcliffe are below average. It means that Bob Radcliffe does not have enough capability to pay-off its short-term debt.

Inventory holding ratio is quite consistent over the period under review. A high number of days inventory indicates that there is a lack of demand for the product being sold. A low days inventory ratio (inventory holding period) may indicate that the company is not keeping enough stock on hand to meet demands.

Financial Risk Ratios

Financial Risk:

2009

2008

Difference

Total gearing

0.86

0.68

-0.182345438

From the above table, we can say that Bob Radcliffe is going more towards debt-financing rather than equity-financing. This trend is dangerous and can harm the financial health of the company in long-run.

Profitability

Profitability:

2009

2008

Difference

Returns on Owner's Equity

-0.56

0.43

0.990345939

Operating Profit %

-2.45

10.03

12.47173911

Expenses %

104.46

89.47

-14.98703727

The profitability position of Bob Radcliffe is getting worst. One most prominent reason is the increase in operating expanses.

Market Value Ratios

Investors Ratio:

2009

2008

Difference

Earnings per Share

-3,104.66

6,313.39

9418.049527

Earning per share was better in 2009 rather than in 2009. This shows that the company is going towards facing losses in near future as the earning per share is negative in 2009.

Cost-Volume-Profit Analysis

The cost-volume-profit analysis is the systematic examination of the relationship between selling prices, sales, production volumes, costs, expenses and profits. This analysis provides very useful information for decision-making in the management of a company. For example, the analysis can be used in establishing sales prices, in the ...