Analytical Review of the Financial Position and Reporting of Next Plc.
Executive summary.
This report is prepared from the standpoint of a shareholder who is interested in the financial performance of Next plc with the particular concern for dividends, earnings and share price.
The main findings of this report are the following:
• accounting policies adopted by Next plc correspond to the required standards and, in our views, prove to be relevant, reliable, understandable and consistent.
• Analysis of investment ratios, gearing ratio and profitability ratios was done and, in our view, being a highly financed business Next plc managed to deliver quite decent results in this testing and critical period. It adopted such policies and made such decisions that allowed earning per share rise 24% and increase the dividend payout in spite of the fact that the dividend cover ratio has not changed. It has increased its operational profit that is of great importance for Next plc due to its high level of gearing. It still has a huge debt but it also has plans for expansion and increasing its profit. The price per earning ratio may be of concern for investors but it seems that Next plc takes measures to strengthen its shares.
1. Appraisal of the accounting policies of Next plc.
The Next interim statements up to July 2010 have been prepared in accordance with IAS 34 Interim Financial Reporting (www.next.co.uk). Accounting policies correspond the required standards. The financial statements have been prepared on the historical cost basis in accordance with the historical costs convention; exceptions have been made for certain financial instruments, pension assets and liabilities which were measured at fair value.
As for the going concern convention, the Directors’ report states that they have a reasonable expectation that the business has adequate resources to continue its operations for the foreseeable future. www.next.co.uk.
The interim statement of Next plc reveals some changes that were adopted to the accounting policies due
This report is prepared from the standpoint of a shareholder who is interested in the financial performance of Next plc with the particular concern for dividends, earnings and share price.
The main findings of this report are the following:
• accounting policies adopted by Next plc correspond to the required standards and, in our views, prove to be relevant, reliable, understandable and consistent.
• Analysis of investment ratios, gearing ratio and profitability ratios was done and, in our view, being a highly financed business Next plc managed to deliver quite decent results in this testing and critical period. It adopted such policies and made such decisions that allowed earning per share rise 24% and increase the dividend payout in spite of the fact that the dividend cover ratio has not changed. It has increased its operational profit that is of great importance for Next plc due to its high level of gearing. It still has a huge debt but it also has plans for expansion and increasing its profit. The price per earning ratio may be of concern for investors but it seems that Next plc takes measures to strengthen its shares.
1. Appraisal of the accounting policies of Next plc.
The Next interim statements up to July 2010 have been prepared in accordance with IAS 34 Interim Financial Reporting (www.next.co.uk). Accounting policies correspond the required standards. The financial statements have been prepared on the historical cost basis in accordance with the historical costs convention; exceptions have been made for certain financial instruments, pension assets and liabilities which were measured at fair value.
As for the going concern convention, the Directors’ report states that they have a reasonable expectation that the business has adequate resources to continue its operations for the foreseeable future. www.next.co.uk.
The interim statement of Next plc reveals some changes that were adopted to the accounting policies due
Bibliography: Iain Ward-Campbell, (2010), Business Accounting, Distance Learning Bradford MBA. Next plc Interim Statement July 2010, www.next.co.uk, accesed on 15/11/2010 Peter Atrill, Eddie McLaney, (2008) Accounting and Finance for Non-Specialists, 6th edition, Prentice Hall.