Friday, February 1, 2019
An Interpretation of the ratios for Marks and Spencers and the House of
An reading of the ratios for label and Spencers and the House of FraserFindings========This section of the report entrust be make up of an interpretation ofthe ratios for both companies. All ratios that crap the ratio analysiswill be explained, and any trends from within ratios will behighlighted.OVERALL proceedingReturn on pileus Employed Net profit in the first place tax and interest x100 = %Capital employedThe Return on Capital Employed ratio (R.O.C.E) is a hugely noteworthyratio, and a striking deal can be taken from this ratio. The ratiorelates to the profit get in relation to the long- stipulation dandyinvested in the backing. The term capital employed in this equationmeans the owners capital plus any long term liabilities (for examplelong-term loans). This ratio shows the % return on capital invested inthe company. A business will aim to have this ratio as high percentageas possible. If the percentage return on capital invested is less thanthat offered elsewhere, then it may be wise to close the business andinvest elsewhere.The ratio analysis shows that Marks and Spencer saw a snub drop ontheir R.O.C.E from 1999 to 2000, however, they managed to enlarge theR.O.C.E the following year. The next year, 2002 shows the mostsignificant changes. The R.O.C.E increased from 9.61% in 2001, to20.89% in 2002. This is almost a 120% increase on R.O.C.E.The House of Fraser had a slightly better R.O.C.E than Marks andSpencer in 2000, however, the following year they experienced a dropof around 1.5%. The ensue for 2002 shows that The House of Frasermanaged to almost double their R.O.C.E from 8.6% in 2001 to 15.91% in2002. Although this was a sizeable increase, The House of Frasercurrently have a R.O.C.E th... ...tly. The company needs to be moreflexible with the volume and style of clothing they stock. People armuch more fashion conscious than they used to be, it is essential forthe credibility of a company that they are consistently at the heightof fas hion.The results for the debtors collecting period for Marks and Spencerare very worrying, especially when compared to The House of Fraser.Marks and Spencer need to dramatically reduce the collection period in rove to avoid any problems in the future. Marks and Spencer currentlyoffer their customers the pick of having a store card. Although intheory, this is a good idea, especially form a marketing perspectiveit can cause many problems in the long run. Customers can leavepayment for long periods of time. This leads to Marks and Spencer notbeing paying(a) for stock they no longer own, and should have been paid for.