FINANCIAL REPORT

Financial report



Ratio Analysis

Ratio's

Formula used for calculation

Marks & Spencer

Profitability ratio's

2012

2011

2010

2009

2008

Gross profit margin

Gross profit/sales x 100

37.8

38.2

37.9

37.2

38.6

Net profit margin

Net profit/sales x 100

5.16

6.28

5.52

5.61

9.11

Operating profit margin

Profit before interest and tax/sales x 100

7.5

8.6

8.9

9.6

13.4

Liquidity & Efficiency ratios

Current ratio

Current assets/current liabilities

0.73

0.74

0.8

0.6

0.59

Acid test ratio

Current assets - stock/current liabilities

0.1

0.21

0.21

0.18

0.16

Return on capital employed (ROCE)

Profit before interest and tax/capital employed x 100

7.02

8.44

7.3

7.05

13.1

Return on equity (ROE)

Net profit/shareholders funds

18.81

25.17

24.56

25

45.5

Debtor days

Debtors/sales x 365

3.91

3.5

3.29

3.39

3.08

Creditor days

Trade creditors/purchases x 365

56.35

51.92

48.59

32.41

16.04

Stock days

Average stock/cost of sales x 365

49.73

47.83

41.22

40.14

39.88

Investor and gearing ratios

Earnings per share

Earnings (profits) attributable to ordinary shareholders / Weighted average ordinary shares in issue during the year

5.45

13.01

8.15

1.5

13.19

Price earnings

Market value/earnings per share

27.57

28

25

29

20

Dividend yield

Net profit/dividends

1654.839

3221.053

1878.571

1209.524

1654.839

Interest cover

Profit before interest and tax/interest

2.14

5.24

0.44

5.05

10.14

Earnings yield

Earnings per share/market value x 100

6.62

8.01

7.37

7.79

12.51

Profitability Ratio

The performance of the company has remained same for the 4 years and the Net Profit Margin and Gross Profit margin has remained the same over the period of time. The Gross profit margin has hovered around 31% while the net Profit margin has been hovering around 5%. The company has remained stable throughout the 4 years.

Efficiency & Liquidity Ratios

The Current ratio and Acid Test ratios of the company are below 1 which means that the company is unable to manage the working properly and is not efficient in handling the Current Assets and Current Liabilities. It can affect the business in a negative way because working capital management is necessary for business in order to ensure smoothness of operational decisions. The average stock days of the company has been increasing which means that the company has been. ROE and ROCE has been favorable and company has been generating sufficient returns the investments carried out into the business.

Investor and Gearing Ratios

The Earning per share of the company has been highest in the year 2011 i.e. 13% and then again had fallen to 5%. P/E ratio has been around 27 throughout the 4 years which means that the investment done today will be returned after 27 years. The company was unable to cover the interest in 2009 but overall satisfactory performance existed in this aspect and coverage ratio has been minimum 2.

Ratio's

Formula used for calculation

Tesco

Profitability ratio's

2012

2011

2010

2009

2008

Gross profit margin

Gross profit/sales x 100

8.2

8.5

8.1

7.8

7.7

Net profit margin

Net profit/sales x 100

4.35

4.39

4.09

3.96

4.49

Operating profit margin

Profit before interest and tax/sales x 100

6.2

6.5

6.1

5.9

5.9

Liquidity & Efficiency ratios

Current ratio

Current assets/current liabilities

0.67

0.68

0.73

0.77

0.61

Acid test ratio

Current assets - stock/current liabilities

0.12

0.14

0.18

0.2

0.17

Return on capital employed (ROCE)

Profit before interest and tax/capital employed x 100

5.73

5.7

5.08

5.63

7.73

Return on equity (ROE)

Net profit/shareholders funds

16.3

16.96

16.87

17.2

18.9

Debtor days

Debtors/sales x 365

15.85

15.85

15.85

15.85

15.85

Creditor days

Creditors/purchases x 365

67.75

65.68

62.89

60.32

59.21

Stock days

Average stock/cost of sales x 365

21.98

21.58

22.74

21.54

20.25

Investor and gearing ratios

Earnings per share

Earnings (profits) attributable to ordinary shareholders / Weighted average ordinary shares in issue during the year

13.01

8.15

1.5

13.19

18.69

Price earnings

Market value/earnings per share

Dividend yield

Net profit/dividends

18706.67

18964.29

19391.67

19390.91

18706.67

Interest cover

Profit before interest and tax/interest

7.07

5.59

13.95

10.92

7.07

Earnings yield

Earnings per share/market value x 100

14.1

9.1

0.42

12.26

20.51

Profitability Ratios

Gross profit margin hovered between 7-8% throughout the 4 years and the Net Profit Margin remained 50% of the Gross Profit Margin throughout i.e. 4%. Operating profit remain 6%. All three categories have depicted stable performance and there was no unusual trend observed.

Efficiency & Liquidity Ratios

The Liquidity and Acid test ratios of TESCO are similar to that of Marks ...