TRAVIS PERKINS PLC

Financial Reporting and Applications Travis Perkins

Executive Summary

The main reason of this research is to make financial analysis of Travis Perkins PLC Company. This paper discusses that how financially stable is Travis Perkins, and whether it is feasible for the investor to invest in Travis Perkins or not. The financial analysis will be interpreted by taking out the result from different tools like the ratio analysis through which we will calculate the profitability analysis, the debtors and creditor's analysis and the liquidity ratios. In this paper, the comparison of Travis Perkins will also be made to check the position of the company. In the end, the conclusion will be made that whether Travis Perkins is a good company for the future development and growth, investment and profit oriented or not?

Financial Reporting and Applications of Travis Perkins

Introduction

The UK's third largest builders and merchants have made a bid to leapfrog their rivals in 20(15 with the proposed acquisition of one of the country's largest DIY retailers. Travis Perkins are proposing to pay 950m for Wickes and have put in place a new bank facility of £1.2 billion and raised E7.5 million through a new stock market placing to fund this and their bolt-on acquisitions and Brownfield investments (Wood, 1991, 691). Wickes, part of the Focus Wickes Group, trade profits of around £75m on turnover of £911m in their last financial year. Their 172 stores are sited across the country with a heavier bias towards the south-east. Wickes cover the heavy end of the DIY market and also cater for trade customers- around 35% of their customers are trade, another 30 are 'professional DIYers'. Buying Wickes will give Travis Perkins further exposure to the DIY market as well as providing synergies from combining the businesses.

Discussion and Analysis

Ratio Analysis

Ratio analysis is one of the most popular tool for evaluation of financial statement of the company , its quickly tells the position of the company in terms of its financial stability , normally it is used by investors and managers to see firms ability to pay of its debt , its dependency on loans and other factors.

Synopsis of Travis Perkins Plc

TP finance director Paul Hampden Smith says the purchase is a good fu for Travis Perkins as around a third of their customers are typical merchant customers, and there's around an 80% overlap with products which means there are lots of opportunities for buying synergies (Waddock, 1997, 250). "We are buying into a business with very good growth prospects, in a market that is still expanding. Wickes have a very strong track record with development and there are around 28 new sites in the pipeline," he says. "They are also quite clever with the way they run the business, only carrying around 6,000 product lines in their core stores. Other stores work on consignment stock so they do not pay for it until they have been paid." The acquisition has yet to be ratified by the shareholder and is subject to Office of Fair ...