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Interpretation of Published Accounts, Investment Analysis on Jd Sports and Sports Direct

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Interpretation of Published Accounts, Investment Analysis on Jd Sports and Sports Direct
INVESTMENT ANALYSIS OF JD SPORTS AND SPORTS DIRECT

Table of Contents
INTRODUCTION 5
1. FINANCIAL ANALYSIS OF JD SPORTS AND SPORTS DIRECT 5
1.1 Liquidity Ratios 5
1.2 Profitability Ratios 6
1.3 Debt Ratios 7
1.4 Operating Ratios 8
1.5 Investment Valuation Ratios 8
2. ASSESSMENT OF FIRMS VERSUS THE INDUSTRY 16
3. INVESTMENT RECOMMENDATION 17
The recommendation for Dave Jones is rationale for several reasons: 18
REFERENCES 20

INTRODUCTION

As the member of World Wealth Management our group has analysed and evaluated the published financial statement of Sports Direct and JD Sports Fashion.plc from year 2010 to 2012 for providing and investment guideline to Mr. Dave Jones. In our analysis we have utilized various types of ratios like profitability ratios (notably ROCE, Net Profit Margin and Asset Turn over Ratio), Activity ratios, Liquidity ratios, Investment valuation ratios and others. The report and analysis includes a justification of using the various ratios that have been chosen. The report also includes investor ratios as part of the assessment. In addition, the report includes an analysis of both companies in relation to the industry. The report concludes with a recommendation on how Dave should proceed with the investment decision based on assumptions of Dave’s attitude to risk.

The report is structured as follows: (1) financial analysis of JD Sports and Sports Direct; (2) assessment of both firms versus the industry; and (3) investment recommendation for Dave. Each of these sections is presented in greater detail below.

1. FINANCIAL ANALYSIS OF JD SPORTS AND SPORTS DIRECT

The financial analysis of JD Sports and Sports Direct looks at various ratios. These include, profitability ratios, liquidity ratios, debt ratios, operating ratios, and investment valuation ratios. It is important to review the performance of the two firms across the different sets of ratios in order to have a robust and extensive assessment of the


References: 9. Sports Direct (2010) “Annual Report 2010”, [Online] Available from http://www.sportsdirectplc.com/annual-reports-and-presentations/2010.aspx [Accessed on 10 November 2012] 10. Teoh, L.K 11. Yahoo News (2012) “JJB Sports 'owed creditors £210m '”, 11 November 2012, [Online] Available from http://uk.news.yahoo.com/jjb-sports-owed-creditors-210m-200156573.html [Accessed on 12 November 2012]
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