Report on Bass PLC
We as a group have decided to assess the financial performance of Bass PLC, in the form of a report. Bass PLC has extensive interests in hotels, leisure retailing and branded drinks. It owns Holiday Inn and Inter-Continental Hotels, Bass leisure retail and Britvic Soft Drinks. We have decided to write this report using five main aspects of performance, Profitability, Efficiency, Liquidity, Gearing and finally investment.
In 1997 the group turnover was £5.25 billion pounds, an increase of £145 million pounds from the previous year. This clearly indicates that the group is steadily growing and our first impressions of the group are that it is in a strong financial position. We split profitability into three main ratios. We found that the figures on which the ratios are based may have be distorted by inflation causing an overstatement of profit and an understatement of asset values. For 1997 the return on capital employed was 15.7% an increase of 1.4% from 1996 which stood at 14.3%. We discovered this to be a fundamental measure of the Bass groups performance showing the relationship between the net profit generated and the long term capital invested in the company. The second ratio we consulted for our assessment of the profitability of Bass is the net profit margin which was 11.7% in 1996 but has decreased to 7.0% in 1997. This shows that Bass are trying to operate on low profit margins in order to stimulate sales and thereby increase the total amount of profit generated. Thirdly we have calculated the percentage return on turnover which for 1996 was 8.9% compared to 5.0% in 1997.