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financial analysis

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syahidah zalani

on 13 September 2012

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Transcript of financial analysis

KINGFISHER PLC market leader in the UK and France, two of the largest retail markets in Europe. COMPANY
BACKGROUND In 1998, the company merged with B&Q and Castorama to form a joint venture. In 2002 the remaining stake in Castorama was acquired to create the largest home improvement retailer in Europe. By 2012 Kingfisher had nearly 970 stores in eight markets in Europe and Asia Kingfisher had its beginnings in 1982 Subsidiaries of Kingfisher PLC focus exclusively on its home improvement businesses NATURE OF
BUSINESS Home improvement products such as home
appliances, tools, hardware,
and garden supplies & plants. the largest assortment of repair and maintenance products FINANCIAL ANALYSIS 320 BM1125C Lecturer: Madam Norazidah Shamsudin LIQUIDITY RATIO ANALYSIS CURRENT RATIO QUICK RATIO NET WORKING CAPITAL The current ratio for both years 2010 and year 2011 is same.
It showed that the current ratio in both years is 0.99 times. Meanwhile, in quick ratio it showed that the year 2010 is bigger than the year 2011 which are 0.50 times and 0.37 times respectively. In terms of net working capital, year 2010 is –RM49 while year 2011 is –RM30. This means that the company could not ability to payback its short term obligations. Moreover the current asset for both years is higher than current liabilities 2010 2010 2010 = 0.99 TIMES = 0.99 TIMES 2011 2011 2011 = 0.50 TIMES = 0.37 TIMES = (RM49) = (RM30) LEVERAGE RATIO DEBT 2010 2011 2010 2011 TIME INTEREST EARNED = 49.67% = 43.14% = (8.23) TIMES = (15.49) TIMES It means that the debt ratio in year 2010 is higher than the year 2011 which are 49.67% and 43.14% respectively. Since total asset are greater than the total debt, the creditors are secured to get back their money if anything goes wrong to company. In terms of time interest earned in year 2010 and 2011, both the years had negative ratio. Since the result of the ratio is negative, the company could not be able to pay the interest charges applied on the debts taken. AVERAGE COLLECTION PERIOD ACTIVITY RATIO ACCOUNT RECEIVABLES TURNOVER INVENTORY TURNOVER FIXED ASSET TURNOVER TOTAL ASSET TURNOVER 2010 2010 2010 2010 2010 2011 2011 2011 2011 2011 =1.85 DAYS = 1.93 DAYS = 194.59 TIMES =186.53 TIMES = 4.34 TIMES = 3.65 TIMES = 2.91 TIMES = 2.88 TIMES = 1.07 TIMES = 1.09 TIMES The company’s inventory turnover in year 2011 is also very much lower than the year 2010. This could be due to lower sales or the company maintaining too much inventories. Its customer also took a longer period to payback their debt as shown by the average collection period which is the year 2011 is 1.93 days and the year 2010 is 1.85 days. Moreover, in inventory turnover, the year 2010 is bigger times than the year 2011 which is 4.34 times and 3.65 times respectively. In terms of fixed asset turnover, once again the year 2010 got higher than the year 2011 which is 2.91 times and 2.88 times. Besides that, for the net sales and total assets, in year 2011 is higher than the year 2010. It means that the total asset turnover the year 2011 is 1.09 times and the year 2010 is 1.07 times. GROSS PROFIT MARGIN PROFITABILITY RATIO OPERATING PROFIT MARGIN NET PROFIT MARGIN RETURN ON ESSETS (ROA) RETURN ON EQUITY(ROE) EARNINGS PER SHARE DIVIDEND PAY OUT RATIO DPS RETENTION RATIO BOOK VALUE PER SHARE Due to net profit margin the year 2010 is lower than the year 2011. The company’s sales in the year 2010 are not generating as much profit as the year 2011. Its return on total assets is lower than the year 2011 that is for company invests the assets are only able to generate a profit of 3.69% as compare to the year 2011 which is 4.73%. 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2011 2011 2011 2011 2011 2011 2011 2011 2011 2011 = RM13.36 = RM14.72 = 67.78% = 73.89% =RM0.34 =RM0.35 = (32.22%) = (26.11%) = RM1.05 =RM1.33 = 7.83% =9.05% = 3.94% = 5.14% = 3.69% = 4.73% = 5.48% = 6.37% = 36.15% = 37.37% In a nutshell it shows that the year 2011 result in calculating ratios is better than the year 2010. The increment occurred during the year 2010 to the year 2011. Refer to those previous calculations, it clearly seen that the year 2011 had high ratios compared to the year 2010 especially in profitability ratio. CONCLUSION Its retail brands include B&Q, Castorama, Brico Depot and Screwfix. As of January 28, 2012, the Company operated over 955 stores in eight
countries in Europe and Asia
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