Marks and Spencer

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Contents
1. Introduction
1.1 Topic chosen ……………………………………………………………………...........2
1.2 Reason for choosing the topic ……………………………………………………... ….3
1.3 Research approach………………………………………………………………….…...5 1.4 Aims and objectives of the research………….…….…………………………...……... 5 2. Information gathering
2.1 Sources of information ………………………………………………………………….7
2.2Liabrary research…………………. ……………………………………………………..9
2.3 Limitations of information gathering ……………………………………………..........10
2.4 Explanation of accounting techniques …………………………………………….........11 3. Analysis and presentation
3.1 Financial analysis
General overview
Revenue analysis ……………………………………………………………………………13 Profitability
(i) Gross profit margin ……………………………………………………………….........14
(ii) Net profit margin …………………………………………………………. ……..........16
(iii) Return on capital employed……………………………………………………………17
(iv) Net asset turnover ………………………………………………………………..........19
Liquidity
(i) Current ratio …………………………………………………………………………….20
(ii) Quick ratio …………………………………………………………………………......21
(iii) Inventory holding period ……………………………………………………………...22
(iv) Receivables collection period ………………………………………………………....23
(v) Payables payment period ………………………………………………………………24 Financial position
(i) Gearing ………………………………………………………………………….............24
(ii) Interest cover …………………………………………… ………………………. ……25 Investor ratio
(i) Earnings per share ………………………………………………………………………26
(ii) Dividend cover …………………………………………………………………………27 3.2 Non-financial analysis.
3.2.1 SWOT analysis ………………………………………………………………………..29 4. Conclusions…………......…………………………………………………………….. ….…..33 5. Recommendations ……………...….…………………….…………………………............36 6. Bibliography ………………………………………………………………………..................37 7. Appendices ……...………………………………………………………………………….…..40

Chapter 1: Introduction
1.1 Chosen Topic and Its Context:

This research and analysis project, analyses the Financial and Business performance of Marks and Spencer Plc which is the holding company of Marks and Spencer group of companies, from the period of March 28th 2007 to March 29th 2009. This project has been carried out for the potential investor and shareholder prospective. It considers accounting and financial key ratio and various aspects of current economic and business environment. The project compares with the performance of one of its closest competitor John Lewis partnership, Waitrose.

In 1884 a Russian refugee called Michael Mark opened a stall in Leeds Kirkgate market where all items were sold in a penny. The first store was opened in Manchester in 1893. In 1894 Thomas Spencer a Bookkeeper joined Michael Mark by investing 300 pounds. Today Marks and Spencer is one of the leading retailer with over 600 stores in UK and expanding overseas. Marks and Spencer employs over 75000 people in UK and Abroad.

Marks and Spencer offers high quality women wear, stylish clothing, house holds and fresh foods. 51% of its business is in Foods and rest in clothing and house hold .Marks and Spencer is the first retail store which introduced expiry date on its food products. Today Marks and Spencer does not sale Genetically Modified product and artificial color and flavorings in its foods and soft drinks. (Source: M&S website)

The company offers financial services through M&S Money. Its range of financial products includes credit cards, car, home, travel, pet, and wedding insurance as well as cash ISA and unit trusts like the M&S Ethical Fund. M&S announced the launch of its ‘&more’ credit card in 2003. Alongside this, M&S Financial service was re-branded ‘Marks and Spencer Money’. In 2004 M&S completed the sale of Marks and Spencer Retail financial Services Holding (M&S Money) to HSBC.(source: DataMonitor) In foods M&S perform well by keeping steady growth, of 4.3 % in 2009. (Source: Datamonitor)

1.2 Reason of choosing the topic

The main reason behind choosing the topic is my interest in F7 Financial...
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