Ratcliffes Executive Summary
Ratcliffes A Case Study
By Jonathan Pelley
Level 5 Professional Diploma in Management Studies
Report for Mick Landers
Executive Summary
This report has been produced to give an accurate indication of the current financial position of Ratcliffes Ltd.
At first glance it would seem that Ratcliffes is a successful profitable business with Gross Profit and Operating Profit both increasing year after year. However, if we look closer at Ratcliffes accounts we will see a company with some problems. With a low return on investment, poor stock turnover and excessive numbers of staff this is a business which needs to get control.
With more planned capital investment needed for expansion of the restaurant, Racliffe's need to look …show more content…
In 2004 the return was only 2.94%. This was a low figure as the operating profit for the year was low. There may have also been investment made in kitchen equipment which would decrease the return
It can be seen that as the operating profit increases, so does the return on investment. It can also be seen that the business has been controlling the Fixed costs of the business well. It is however, not a very high figure. As a benchmark, and it is quite a crude benchmark, investing money in a bank account would normally give you a return of around 10% so a worthwhile return would normally be above this level
Aging fixed assets mean lower capital employed and hence, higher R.O.C.E. However, in the case of Ratcliffes this may indicate a variety of potential operational problems such as higher maintenance costs due to the kitchen equipment in the South Bristol branch being old. Other operational problems that would affect R.O.C.E. would be competitive inefficiency, Ratcliffes being a labour intensive operation and impending obsolescence.
Stock …show more content…
I would suggest the reason for the low figure is the high numbers of staff that are currently employed by Ratcliffes. Part of the problem seems to be the extensive management structure that is currently in place at Ratcliffes. It is not possible to see whether any of the competitors operate a similar structure but looking at the number of staff employed by the other companies, they seem to have more control over their employment structure. On the Green for example take more than over £100,000 revenue compared to Ratcliffes but with five fewer
By Jonathan Pelley
Level 5 Professional Diploma in Management Studies
Report for Mick Landers
Executive Summary
This report has been produced to give an accurate indication of the current financial position of Ratcliffes Ltd.
At first glance it would seem that Ratcliffes is a successful profitable business with Gross Profit and Operating Profit both increasing year after year. However, if we look closer at Ratcliffes accounts we will see a company with some problems. With a low return on investment, poor stock turnover and excessive numbers of staff this is a business which needs to get control.
With more planned capital investment needed for expansion of the restaurant, Racliffe's need to look …show more content…
In 2004 the return was only 2.94%. This was a low figure as the operating profit for the year was low. There may have also been investment made in kitchen equipment which would decrease the return
It can be seen that as the operating profit increases, so does the return on investment. It can also be seen that the business has been controlling the Fixed costs of the business well. It is however, not a very high figure. As a benchmark, and it is quite a crude benchmark, investing money in a bank account would normally give you a return of around 10% so a worthwhile return would normally be above this level
Aging fixed assets mean lower capital employed and hence, higher R.O.C.E. However, in the case of Ratcliffes this may indicate a variety of potential operational problems such as higher maintenance costs due to the kitchen equipment in the South Bristol branch being old. Other operational problems that would affect R.O.C.E. would be competitive inefficiency, Ratcliffes being a labour intensive operation and impending obsolescence.
Stock …show more content…
I would suggest the reason for the low figure is the high numbers of staff that are currently employed by Ratcliffes. Part of the problem seems to be the extensive management structure that is currently in place at Ratcliffes. It is not possible to see whether any of the competitors operate a similar structure but looking at the number of staff employed by the other companies, they seem to have more control over their employment structure. On the Green for example take more than over £100,000 revenue compared to Ratcliffes but with five fewer