RATIO ANALYSIS

Carte Blanche Group Limited

Carte Blanche Group Limited

Introduction

Carte Blanche Group Limited is a group of companies that produces greeting cards. This company is one that produces greetings and has also acquired a publishing group, Hotchpotch Publishing Limited. This has helped the company in earning more and the company has vertically integrated which will benefit the company in terms of revenue. The costs of the company will be reduced which means that the company will save more and will also earn more. The costs of the company will be reduced which will help the company in improving its financial position and will also help in increasing the efficiency of the company (Howard, 2008, 34). This paper will compare two companies. One will be a private company and the second will be a public company. The private company chosen for the analysis purpose is Carte Blanche Group and the listed company (public company) chosen for analysis is Sainsbury. The companies will be compared on the basis of their ratios which will help in analysing the performance of both the companies.

Critical Ratio Analysis of the Company

 

 

31/12/2010

 

31/12/2009

 

31/12/2008

 

31/12/2007

 

GBP

GBP

GBP

GBP

 

 

 

 

 

PROFITABILITY RATIOS

 

 

 

 

 

 

 

 

 

Return on Shareholders' Funds (%)

10.56

8.52

9.00

9.84

Return on Capital Employed (%)

9.60

8.39

7.93

7.91

Return on Total Assets (%)

7.68

6.42

6.11

6.00

Profit margin (%)

11.10

9.21

8.79

9.26

Gross margin (%)

38.23

39.19

37.65

37.43

Berry ratio (x)

1.42

1.34

1.42

1.48

EBIT margin (%)

11.36

9.94

11.05

12.14

EBITDA margin (%)

18.09

17.16

17.86

18.95

The profitability ratios of the company have increased over the past four years. The return on assets and the return on equity have increased which shows that the company is performing well. The return on investment has also increased which means that whatever the company has invested, it has started earning on it. The earning before interest and tax has decreased over the past four years which shows that the earning of the company has decreased as compared to the interest and tax rate. The earnings after tax have also decreased over the past four years which shows that the company is losing revenues. There maybe many reasons for this. The decline is not huge which means that there might be a change in the interest rate or in the tax rate. The berry ratio is an important indicator which shows whether or not, the company is covering the operating expenses with its revenues. A ratio near to one indicates that the company is covering its operating expenses; however, a ratio near to zero shows that the company is spending more than it is earning. In this case, the company is covering the operating expenses, but the ratio has declined a bit. This decline is also reflected in the earnings before and after tax. The company has either started incurring more costs or it has been unable to sustain its earnings.

 

 

31/12/2010

 

31/12/2009

 

31/12/2008

 

31/12/2007

 

GBP

GBP

GBP

GBP

 

 

 

 

 

OPERATIONAL RATIOS

 

 

 

 

Net Assets Turnover (x)

0.86

0.91

0.90

0.85

Fixed Assets Turnover (x)

1.07

1.08

1.06

1.01

Interest Cover (x)

37.00

13.12

4.73

4.07

Stock Turnover (x)

6.61

6.50

6.82

6.78

Debtors Turnover (x)

3.17

3.54

3.17

2.62

Debtor Collection (days)

115.07

103.02

115.22

139.28

Creditors Payment (days)

29.64

34.91

26.52

33.72

The operational ratios indicate the earning capability of the firm. It evaluates the performance of the company and ensures that the company has enough assets and other types of funds to operate effectively. This also includes the debt that the company and the repayment of those ...