Next Account Analysis

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Introduction

Next retail chain was launched in February 1982 and the first store opened with an exclusive coordinated collection of stylish clothes, shoes and accessories for women. Collections for men, children and the home quickly followed. Next clothes are styled by its in-house design team to offer great style, quality and value for money with a contemporary fashion edge. This report will be looking at the accounts of Next plc and comparing the accounts from the years 2010 and 2011 and also looking at competitor’s accounts. The report will study the accounts in depth and provide an analysis of the performance of the company’s trading position. The report will also look at the accounts for the perspective of an investor and will make a judgment for the findings. Within this report there will be analysis of eleven accounting ratios and also a comparison between Next plc and a competitor, which will be Debenhams. Money

The first ratio of the accounts the report will look at is the current ratio of Next plc of the years 2010 and 2011. The current ratio looks at the relationship between current assets and current liabilities. A good current ratio would be 2:1 which would show the business has enough current assets to pay the current liabilities when they are due , however today business tend to work within a ratio of 1:1. For the accounting year 2010 Next plc had a current ratio of 1.4:1, which is a healthy ratio for their business environment and shows they can pay off their current liabilities. The current ratio for 2011 is 1.2:1 so this has gone down due to higher current liabilities, Next plc however could be aiming for a ratio of 1:1 so these ratios show a good relationship between Next plc.’s current assets and its current liabilities. The next ratio to look at is the quick ratio this is the same ratio as the current but you less stock from the current assets.. An apparently healthy level of current assets might hide the fact that a large proportion...
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