Part 1 - Introductory Financial Accounting (MM1F2)

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Part 1 – Introductory Financial Accounting (MM1F2)

Assessed Work 2

Title: Ratio Analysis Report of Marks and Spencer plc

Name: Andrew Powell

Course: Business Management & Administration

Date: 14th March 2005

Abstract: This following report has been put forward to show the decline in the Marks and Spencer share price during the past years. The report will show deterioration in the financial aspects of the company’s operations between January 1998 and August 2000, before a steady improvement is made until March 2002 when share price once again drops. Furthermore, the report should show speculation following Philip Green’s first offer to buyout the company immediately raises the share price of Marks and Spencer. Also, changes in related ratios will be exposed along with possible strategic business reasons why the company has encountered so many difficulties during the past few years.

Contents Page:

Introduction – Page 2

Presentation of Results – Page 2 to 3

  • Change in share price

1.1, 1.2, 1.3 – Page 2

  • Ratios to represent financial situation

2.1, 2.2, 2.3 – Page 2

         2.4 – Page 3

  • Reasons to support changes in share price and ratios

3.1, 3.2, 3.3, 3.4, 3.5, 3.6, 3.7 – Page 3

Conclusion – Page 4

References – Page 4

Appendices – Page 5

Introduction: The following report has been prepared in order to expose the financial aspects of Marks and Spencer’s operations from January 1998 to the time when Philip Green launched a takeover bid in May 2004. The evidence put forward is likely to show that the company’s financial situation has a taken a turn for the worst since 1998 and that consequently share price has been affected greatly. It is, therefore, my objective to address this issue, showing the change in share price and related ratios and the likely causes of such change.

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Presentation of Results:

1. Change in share price

1.1 The share price on the 2nd of January 1998 was 583.5p. At the time of Philip Green’s offer in May 2004 the share price was 276p, indicating a dramatic fall of 307.5p per share.

1.2 The sharpest fall in share price was experienced from the beginning of 1998 to the end of 2000, as can be seen in appendix 1. On the 14th December 2000 the share price had reached a low of 184p but it was then raised to 422.5p in May of 2002, where the increase ...

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