FINANCIAL ANALYSIS

Financial Analysis

Financial Analysis

Referring to the financial statements of Next Plc Details 2006 2005

Return on capital engaged - 470 .7 x 100 183 .7 2 0 276 .5

O 2 3 5 2 ,858 .5

G 1 3 4 2 s 276 .5

The Return on capital engaged (ROCE ) is a primary profitability ratio thead covering should be analysed in minutia in alignment to evaluate the financial performance of the company . By investigating the ROCE based on the information supplied one can glimpse that the ratio improved over time , as s  . This indicates that administration was more capable in earning earnings from the capital engaged of the assembly . Determining other lesser ratios , whose result is revealed in the aforementioned table , can further substantiate this presentation ratio . The operating earnings margin and whole earnings margin stayed quite stable over the year . However , the This indicates that the firm 's resources (capital engaged ) were utilised more competently in the generation of sales . Thus , if a company presents higher sales , and the earnings per every ?1 of sales remained in the identical variety , then the general profitability will definitely improve .

Question 1 (b ) Details Next Retail PLC Next Directory PLC R 7 2,057 .6 (685 - 602 .6 ) x 100 13 .7 602 .6

Operating earnings margin (2006 ) 319 .9 x 100 14 .4 2,216 .8 106 .1 x 100 15 .4 685

O 6 2,057 .6 89 .5 x 100 14 .9 602 .6

From the ratios calculated , we can glimpse that revenue of Next Directory PLC expanded more than that of NEXT Retail PLC . The profit generated from every ?1sales is better for Next Directory PLC rather than of Next Retail PLC , even though the revenue developed is significantly less . Thus we can state that Next book or directions PLC is more money-making than Next Retail PLC . However , Next Retail PLC is globally accomplishing a higher profit because they are developing more sales . Question 1 (c ) Details 2006 2005 Gearing 303 .8 x 100 17 1,783 .7 300 x 100 14 .2 2 ,117 .8 E  ?12 .74 24 .6 305 .4 ?11 .70 26 .1 Next PLC is a low-geared business as demonstrated by the equipping ratio above . Alow-geared business is a less risky firm because the ...