Next.Plc Performance Essay Example
REPORT ON THE
PERFORMANCE OF NEXT PLC.
BUSINESS ACCOUNTING
SPRING 2013
Table of Contents Introduction 3 Profitability Analysis by Sinthusa Muralitharan 4 Working Capital Analysis by Saranya Ratnasingham 9 Conclusion on Next Performance 13 Recommendation 14 Reference/ Bibliography 15 Appendices 16
Introduction Next is one of a main UK based retail company. It offers fashion and accessories for men, women and children as well as full range of home-wares.
In this assignment we would be looking at Performance Ratios of Next and how well they are doing through 2008 – 2012. We have looked more in depth on their profitability and working ratio analysis.
Profitability Analysis by Sinthusa Muralitharan
Profitability Ratios helps to see how effective the business is at generating profits in comparison to the business expenses.
Profitability Analysis includes gross profit margin, net profit margin, operating profit margin and return on capital employed. Using the formulas we have worked out the profitability ratios (as shown in appendix 2.
Return on Capital employed
ROCE is the profit as a percentage of capital employed in the company. Having lower ROCE is bad for the company. Most investors would prefer increase in ROCE each year.
From the graph below (figure 1) we can see that ROCE has decreased tremendously from 2008 to 2009 and increased the year after. 2012 has more or less the same percentage in return on capital employed as in 2008. This shows that there hasn’t been a continuous increase in ROCE throughout8 the years from 2008 – 2012.
Year
Year
Percentage (%)
Percentage (%)
The reasons that might have caused the change in ROCE would be the fact that throughout the years there is a change in profit. If we looked at the Next income statement appendix 3 – 5, we can see that from 2008 to 2009 there is a drop in profit around £58 million. But since then there has been a slight increase each in profit to 2012. This
PERFORMANCE OF NEXT PLC.
BUSINESS ACCOUNTING
SPRING 2013
Table of Contents Introduction 3 Profitability Analysis by Sinthusa Muralitharan 4 Working Capital Analysis by Saranya Ratnasingham 9 Conclusion on Next Performance 13 Recommendation 14 Reference/ Bibliography 15 Appendices 16
Introduction Next is one of a main UK based retail company. It offers fashion and accessories for men, women and children as well as full range of home-wares.
In this assignment we would be looking at Performance Ratios of Next and how well they are doing through 2008 – 2012. We have looked more in depth on their profitability and working ratio analysis.
Profitability Analysis by Sinthusa Muralitharan
Profitability Ratios helps to see how effective the business is at generating profits in comparison to the business expenses.
Profitability Analysis includes gross profit margin, net profit margin, operating profit margin and return on capital employed. Using the formulas we have worked out the profitability ratios (as shown in appendix 2.
Return on Capital employed
ROCE is the profit as a percentage of capital employed in the company. Having lower ROCE is bad for the company. Most investors would prefer increase in ROCE each year.
From the graph below (figure 1) we can see that ROCE has decreased tremendously from 2008 to 2009 and increased the year after. 2012 has more or less the same percentage in return on capital employed as in 2008. This shows that there hasn’t been a continuous increase in ROCE throughout8 the years from 2008 – 2012.
Year
Year
Percentage (%)
Percentage (%)
The reasons that might have caused the change in ROCE would be the fact that throughout the years there is a change in profit. If we looked at the Next income statement appendix 3 – 5, we can see that from 2008 to 2009 there is a drop in profit around £58 million. But since then there has been a slight increase each in profit to 2012. This