Report on Analysis of Next Plc
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Next pc is a uk based retailer that sells moderately price clothing for men, women and children. It also specialize in housewives and furnitures through 500 stores primarily in uk and irelandl. It also franchise more than 200 stores in asia nad Europe counties.
Profitability
The primary financial indicator is the roce which has shown an increases to 53.4 % in 2012 from 52.09 %. But, if the capital employed included the new £300m committed bank facility that yet drawn down at the financial reporting, then the roce show a fall to 42.07 %. The group might understate their long term liabilities.
Roce could further be analyzed through two main ratios which are operating margin and asset turnover.
It is seen that there is slightly decrease in roce could mainly attributable to the fall in asset turnover by 0.62 times. But the group had improved their operating margin of 0.22 % from 17.13% to 17.35 % . It can be said that the group has done a good job to increase its margin in the reporting period, as there were many external challenge which could affect the operationg profit margin. The weakness of sterling pounce was a great challenge to the company, as it is decline by 10cents to the US dollar. Besides that, the revenue has increase 4.35 % because of the soaring cotton prices have push the clothing prices up since the beginning of the year. This cause the average selling price rise 7 %. Base on the trading statement issued by next plc, Next brand sales for the first half year were up 4.5% against last year. It indicated next plc may generate a higher profit coming this year.
Linking this with asset turnover, it has increase of 0.3 times from 3.04 in 2011 t0 3.07 in 2012 if exclude the 300m committed bank facility. This is largely due to the excellent performance of the next directory sales especially through the internet. Unlike stores, this channel of distribution requires the fewer amounts of assets and hence revenue per asset is
Date:
From:
Subject:
Next pc is a uk based retailer that sells moderately price clothing for men, women and children. It also specialize in housewives and furnitures through 500 stores primarily in uk and irelandl. It also franchise more than 200 stores in asia nad Europe counties.
Profitability
The primary financial indicator is the roce which has shown an increases to 53.4 % in 2012 from 52.09 %. But, if the capital employed included the new £300m committed bank facility that yet drawn down at the financial reporting, then the roce show a fall to 42.07 %. The group might understate their long term liabilities.
Roce could further be analyzed through two main ratios which are operating margin and asset turnover.
It is seen that there is slightly decrease in roce could mainly attributable to the fall in asset turnover by 0.62 times. But the group had improved their operating margin of 0.22 % from 17.13% to 17.35 % . It can be said that the group has done a good job to increase its margin in the reporting period, as there were many external challenge which could affect the operationg profit margin. The weakness of sterling pounce was a great challenge to the company, as it is decline by 10cents to the US dollar. Besides that, the revenue has increase 4.35 % because of the soaring cotton prices have push the clothing prices up since the beginning of the year. This cause the average selling price rise 7 %. Base on the trading statement issued by next plc, Next brand sales for the first half year were up 4.5% against last year. It indicated next plc may generate a higher profit coming this year.
Linking this with asset turnover, it has increase of 0.3 times from 3.04 in 2011 t0 3.07 in 2012 if exclude the 300m committed bank facility. This is largely due to the excellent performance of the next directory sales especially through the internet. Unlike stores, this channel of distribution requires the fewer amounts of assets and hence revenue per asset is