Financial Report Degree Case Study Example | Topics and Well Written Essays - 2250 words

Financial Report Degree - Case Study Example Monsoon plc deals in branded variety of clothing, footwear and accessories comprising two major chains i.e., Monsoon and Accessorize. The company caters to a wide range of customers young and old, male and female, babies and children. Apart from clothing and accessories, the company also deals in home ware for instance, bed and bath lines, curtains, and other home products (Company Info, accessed 06.04.2006). Blacks Leisure plc is a high street chain of superstores engaged in outdoor clothing and footwear business all over the United Kingdom having around 104 stores across the country. The company has a diversified customer market and its store design reflect this orientation. It provides clothing and travelling products to a wide range of customers of all ages and kind. It deals in several brands and provides a range of products relating to the outdoor activities and adventure most specifically clothing, tents, outdoor equipments, accessories and instruments The comparison and evaluation presented in this report is significant in the sense that it practically employs a wide variety of financial ratios to assess the financial position and performance of both the companies. ... This comparison would assist these users in forming a rationale for their major decision-making i.e., strategic planning, investment and funds lending etc. RATIO ANALYSIS- BLACKS LEISURE GROUP PLC & MONSOON PLC Ratio analysis is the best tool to evaluate a company's performance and identify problems (Meigs & Meigs, 1993). Riahi-Belkaoui (1998) comments that financial ratios are meant to make the information in financial statements interpretable for the various users of financial statements. Similarly, we will assess and analyse the financial position and performance of the two companies Blacks Leisure plc and Monsoon plc using a broad array of financial ratios from the viewpoints of management, lenders and investors separately. Analysis For Management Management needs to analyse its performance and efforts put into the corporate affairs through the company's financial results so as to realise their strengths and weaknesses. Riahi-Belkaoui (1998, p11) says, "the profitability ratios portray ability of the firm to efficiently use the capital committed by stockholders and lenders to generate revenues in excess of expenses". Therefore, the analysis from the management aspect has been done with the help of following profitability ratios: Ratios Blacks Leisure Plc Monsoon Plc Gross Profit Ratio 53.07% 61.51% Net Profit Ratio 6.54% 15.66% Return on Capital Employed 20.23% 42.76% The Gross Profit Margin Percentage evaluates the percentage of profit earned by a company on sales after the production and distribution activities (Mcmenamin, 1999). It shows how well the company manages its expenses so as to attain maximum profit out of its total sales. Monsoon plc's gross profit ratio of 61.51% reflects that the company