• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

investigating business

Extracts from this document...

Introduction

Interpret Financial Performance using a range of Ratios A.) Return on Capital Employment (ROCE) ROCE compares earnings with capital invested in the company. It is similar to Return on Assets (ROA), but takes into account sources of financing. ROCE is used to prove the value the business gains from its assets and liabilities, a business which owns lots of land but has little profit will have a smaller ROCE to a business which owns little land but makes the same profit. It basically can be used to show how much a business is gaining for its assets, or how much it is losing for its liabilities. Net profit after interest x 100 = ROCE Shareholder funds (capital) 02/03 01/02 270 x 100 = 13.9% 105.5 x 100 = 5.6% 1939.55 1882.0 In 01/02 Whitbread's ROCE was 5.6% where as their next year it was 13.9%. Looking at that there has been 8.3% increase and that is a massive improvement and the reason could be their massive reduction of their administration costs. It looks as if though they reduced their administration costs for nearly half of what they spend in their previous year. When investors want to invest in Whitbread plc this is one of the important things that they are going to look and it looks really good on Whitbread's point of view because they have improved immensely in one year and their investors might see it as a potential business. ...read more.

Middle

Current assets = :1 Current liabilities 02/03 01/02 230.4 = 0.94: 1 213.2 = 0.98: 1 244.0 218.6 The above current ratio is what I got for the two years given and looks as if Whitbread current ratio has fallen down by 0.4. That doesn't look good on Whitbread's point of view because it means that they went down �4 to every �100 than their previous year. They might want to get as close as possible because they don't want to fall far from 1 as it will result them to struggle to pay their short term liabilities which isn't good at all. Acid Test Another name for the "quick ratio". It is used to measure how easily a company could be liquidated, and therefore help financial institutions decide upon how credit worthy the company is. Liquid Assets = :1 Current liabilities 02/03 01/02 230.4 - 23.9 = 0.85: 1 213.0 - 28.1 = 0.85: 1 244.0 218.6 Looking at my figures above it shows that Whitbread hasn't made any improvements at all for their last year; it looks as if though they scored the same results as they did on their first year (01/02). Looking at that it doesn't mean they are doing bad in any way but it would be better to get as close to 1 as possible for Whitbread. ...read more.

Conclusion

However, it will vary between industries and so it is important to compare within an industry. Cost of goods sold = number of times per year all the stock is sold Average stock 02/03 01/02 1,353.1 = 52 times 1,548.00 = 60 times 26.0 26.0 In 01/02 the stock turnover was 60 times and their following year was 52 times. Looking at that it shows that their last year's stock turnover was 8 times less than what they did on their previous year. By judging at their last year it shows that the stock turnover is taking them longer to sell than their previous year and the reason could be because their prices went up and they are making less sales or they are selling something different than their previous year which means its new to customers so its going to take time to make those sales. B.) Analyse the Financial Health of Whitbread PLC I believe Whitbread PLC is doing well because despite ending with a negative figure on the first year they managed to get their balance back on track and id it seems as though if they will be improving on the following years. Judging on their profit and loss account I would say its worth investing as we can see the improvement they made on the second year. ?? ?? ?? ?? Unit 4: Finance for Business - AO3 15/12/2008 1 Alex Gur ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our AS and A Level ICT in Business section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related AS and A Level ICT in Business essays

  1. Marked by a teacher

    Unit 4 Business Studies

    4 star(s)

    put their cars into storage until they are able to pick up their cars which they have purchased and pool fleet management. These are promoted before the sale of a car but heavily after a sale of a car. The only disadvantage to the Cars direct website is that it

  2. For my business report I am investigating the Co-op erative society supermarket.

    the move started as a move by workers to unite and help each other. The Co-op retail group is also Britain's biggest farmer and owner of The Co-op erative Bank. Co-op retails functional objectives: OBJECTIVES: the Co-op supermarket chain is not run to make profit or financial gain.

  1. I have selected a nursery because there is high demand in the UK as ...

    My business has already passed from the growth stage as there are a number of day nurseries which people are aware of hence my nursery will be new in the market but people already know about it. Growth The growth stage is when the product has made an impact on the market and is building customers regularly.

  2. Safeway Plc

    during the late 1950's, and the mobility of the population (increasing car ownership). This sector has prospered over time as shopping habits have changed. The arrival of a new Chief Operating Officer Carlos Criado-Perez some two years ago resulted in a change of strategy, and has transformed Safeway from a "follower" to a dynamic leader in grocery retailing.

  1. In this coursework I need to produce a detailed business report on one medium-sized ...

    The scale of the operation, and the efficient organisation of staff to provide exceptional customer service, requires the extensive use of IT both in telephone and information systems. To give you an idea of the scale of company operation, Tesco employs over 400 staff, both full and part-time.

  2. Business Report on Manchester Airport PLC.

    what business are we in? Mission statements can be unifying, driving force for an organisation, giving it a sense of direction and purpose, but sometimes can be vague and bland. A mission statement needs to be unique, brief and inspirational, and will cover the organisation's purpose/strategy/policies/standards of behaviour/ and values.

  1. Dell - The reason for selecting Hong Kong.

    system for inventory control and sales analysis Graphics and multimedia - Computer graphics has a wide application in various Hong Kong industries. User status All types of users including heavy, medium, light ,non-user also are concentrated. Purchasing Approach General purchasing policies: reliable and accurate, supplier proximity to allow JIT home

  2. For my GCSE business studies I have to make a portfolio investigating two contrasting ...

    For instance, they can mass produce goods for sale and buy in bulk The disadvantages are that: - Companies have to fulfil a number of legal formalities like publish an annual report that can be read by their competitors. - Public limited companies have their business affairs discussed in the newspapers that can ruin the reputation of the business.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work