PEARSON PLC

Pearson Plc

Pearson Plc

Introduction

Pearson is an international media and educations company with businesses in education, business information and consumer publishing. Co. consists of three major worldwide businesses: Pearson Education, which publishes textbooks, supplementary learning materials and electronic educations programmes; The Financial Times Group, which provides international business and financial news, data, comment and analysis, in print and online; as well as The Penguin Group, which publishes the works of authors in a portfolio of fiction, non-fiction and reference titles. Financial highlights for the year 2008 are as follows:

Total Revenue

4,811,000,000

EBITDA

691,000,000

Operating Income

651,000,000

Net Income

292,000,000

Total Assets

9,896,000,000

Current Assets

3,280,000,000

Total Liabilities

4,872,000,000

Current Liabilities

1,970,000,000

Long Term Debt

2,019,000,000

Stockholders' Equity

5,024,000,000

Company Analysis

Pearson has three operating divisions: The Penguin Group, Pearson Education and The Financial Times Group.

Penguin Group: trade publishing

Most Pearson trade publishing is done by the Penguin Group, which includes international imprints such as Allen Lane, Avery, Berkley Books, Dial, Dutton, Dorling Kindersley, Grosset & Dunlap, Hamish Hamilton, Ladybird, Plume, Puffin, Penguin, Penguin Putnam Inc., Michael Joseph, Riverhead, Rough Guides, and Viking.

Infoplease is a website devoted to "providing authoritative answers to all kinds of factual questions since 1938 first as popular radio quiz show, then starting in 1947 as an annual almanac, and since 1998 on the internet."

Pearson Education: educational publishing, software, assessment and training

Some of Pearson's educational publishing imprints include Pearson Longman, Addison-Wesley, Prentice Hall, Benjamin Cummings, Pearson Scott Foresman.

New York Institute of Finance provides financial training.

Financial Times Group: financial publishing

Financial Times

Financial Times Business Group

FTSE International (50% stake)

The Economist Group (50% stake)

In the current situation of Pearson Plc, ratio analysis possess a very important role in determining the past, present and future outlook of the company. Ratio analysis is the most extensively used form of financial analysis. In this section, ratio analysis is aimed at characterizing the firm in a few basic dimensions considered fundamental to assess the financial health of Pearson Plc. We will compare the ratios of 2007 and 2008 in order to determine the financial health of Pearson Plc

Profitability Ratios

Profitability ratios are the projection of how successfully the firm is managing its assets and debts. Actually, profitability ratios measure the ability of the firm to generate earnings or how successfully the firm has generated earnings over a period of time. Profitability ratios are the indicators of the success or failure of the firms' activities.

The return on assets ratio shows that how effectively the assets of Pearson Plc are working to generate profit. According to the situation of the above calculated figures, we can say that the return on assets has increased. This is a positive sign for the company as its earnings are increasing in accordance with the assets.

Return on equity ratio is a comparison of the amount of earnings and the shareholders' equity. This ratio shows the investors that how much the company has earned in contrast to the amount of shareholder' equity. The trend in the return on equity is positive. This means that the earnings are increasing in comparison to the shareholders' equity.

Liquidity Ratios

Liquidity ratios determine the firms' ability to pay back her ...