Financial Analysis

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FINANCIAL ANALYSIS

Financial Analysis

Financial Analysis - Greggs Plc

Introduction

Gregg's Plc is the leading bakery in the United Kingdom with more than 1,480 retail outlets across United Kingdom. The company has employed over 19,000 people and serves more than six million customers on weekly basis. The company is operating since 1939 and is famous for its high quality bakery products such as sandwiches as well as selling freshly baked savories such as Cornish pastries and sausage rolls, local items are also very popular. Gregg's Plc is planning to open around 600 more stores in the near future and it will create around 6,000 new retail jobs. More over the company is planning to extend the serving capacity of the existing retails outlets.

Financial Ratios

Profitability Ratios

01/01/2011

01/02/2010

ROA % (Net)

13.49

12.76

ROE % (Net)

22.34

21.67

ROI % (Operating)

30.85

30.3

EBITDA Margin %

7.93

7.41

Calculated Tax Rate %

27.78

29.53

Liquidity Ratios

01/01/2011

01/02/2010

Quick Ratio

0.38

0.41

Current Ratio

0.75

0.83

Net Current Assets % TA

(6.88)

(4.92)

Efficiency Ratios

01/01/2011

01/02/2010

Total Asset Turnover

2.36

2.44

Receivables Turnover

108.67

83.67

Inventory Turnover

21.26

20.99

Accounts Payable Turnover

19.38

20.9

Accrued Expenses Turnover

91.22

97.68

Property Plant & Equip Turnover

3.04

3.07

Cash & Equivalents Turnover

23.97

33.16

Per Share

01/01/2011

01/02/2010

Cash Flow per Share

0.62

0.71

Book Value per Share

1.74

1.58

Financial Analysis of Greggs Plc

Financial ratio analysis is the examination of the association amongst financial variables of a company or industry. For the purpose of analysis, financial ratios of more than one year of an organization are analyzed to find out the true picture of the company's financial position. Making a comparison in this manner would help in analyzing the particular problems of a firm. Following is the financial analysis of Greggs Plc for the years 2010 and 2011 based on the ratios calculated using the financial information in the financial statements.

Profitability

Profitability Ratios

01/01/2011

01/02/2010

ROA % (Net)

13.49

12.76

ROE % (Net)

22.34

21.67

ROI % (Operating)

30.85

30.3

The profitability trend of the Greggs Plc is increasing, hence, over all the company is in positive profitability trend. This can be seen in the profit comparison of the two years in the above table. This situation can attract good investors. In order to maintain this trend, the company needs good financial strategy for the future earning to be in positive trend as well. As we can see that all the ratios including ROA, ROE, ROI and EBITDA Margin are showing an increase over the two years. An increase of 0.73% has been observed in ROA ratio from 2010 to 2011. Similarly an increase of 0.67% and 0.55% has been observed in ROE and ROI ratios respectively.

As far as ROI is concern, Greggs Plc has enhanced their investment due to profit earned in last few years. Increasing the level of this index indicates higher efficiency of capital employed. This is a signal to shareholders that the company actually uses its resources like other companies in the industry. That is why when a new issue of shares (stocks) should pay special attention to the level of this index and its change over time. Hence, the overall profitability of the company has increased from 2010 to 2011 which is a good sign for the company and its shareholders.

Liquidity

Liquidity Ratios

01/01/2011

01/02/2010

Quick Ratio

0.38

0.41

Current Ratio

0.75

0.83

Liquidity of a company is one of the most important indicators of the financial strength and performance of a company, as ...
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