Coca Cola Financial Analysis

B & Q (RETAIL) LIMITED analyzing

B & Q belongs to the Kingfisher Group which is one of the Fortune 500 Company. It is world-leading large international retail group of decoration and building materials. In the 1969, Richard Block and David Quayle established the first shopping mall. The name of it was consisting of the first letter of their last name.

From the reporting of recent 3 years, however, the recent situation is not going well. Return on ordinary shareholders` funds represents the profit that is left for the owners, although the amount of it was growing from 2011(3.96) to 2012(4.65), to the 2013, it became minus. Through the calculating, in 2011, Return on capital employed, 3.97, was higher than gearing ratio, 3.35, which represents they got the profit. Nevertheless in 2013, the operating profit was -43,900, so the company got loss. Operating profit margin in 2011 was 4.04, and in 2012, it grew to 5.60 which mean every £5.60 of sales revenue an average of 56p was left as operating profit after accounting for cost of goods sold and operating costs. Because the operating profit in 2013 is minus, so the margin is minus too. Adding depreciation and other operating expenses, the gross profit in 2013, 2012 and 2011 were 1,474,600, 1,512,200 and 1,468,200, so the gross profit margin of recent three years were 40.53, 40.76 and 39.56. Every £1 of sales revenues 40.53p, 40.76p and 39.56p were left to cover other operating expenses and leave an operating profit. Average inventories turnover period measures the average period for which inventories are being held, in 2011, the average inventories held was 636,100, and cost of sales was 2,243,500, so the Period was 103.49 days, which means every 103.49 days, the inventories held are been turned over. The amount of it was increasing. To the 2013, it became 116.25. It is not a proper trend. All the companies enjoy shorter period of trade receivables, however from 2011 to 2013, the period was increasing from 10.76 to 12.73. This poses a problem for management who need to tighten up their systems and controls and introduce procedures such as agreeing payment terms and conditions upfront or using incentives for early payment. [1]Asset turnover ratio from 2011 to 2013 was decreasing from 0.98 to 0.84 which representing the operating performance was fallen down. A high ratio is desirable as compared to a low ratio since the former is indicative of better operating performance. However, the sales revenue per employee of company was stable, 2011 the ratio was 118.76 and in the 2013 it was 118.24. The ratio shows the productivity of labor force so the stabilized figure is useful. Current ratio is a important index. High current ratio means high cashability of asset and high short-term solvency. B & Q from 2011 to 2013 the ratio was increasing from 4.01 to 5.40, so it is a good omen. Acid test ratio is a norm which determines the firm whether has short-term assets to pay for liabilities without selling inventory. The ratio from 2011 to 2013 was increasing (2011 was 3.37, 2012 was 4.34, 2.13 was 4.59) and was positive number. Also the gearing ratio from 2011 to 2012 is going up, however, in the 2013, the ratio was falling down to the 1.10. The higher gearing ratio mean more risky, and will fall off during the business cycle. The interest cover ratio is a metric that measures a company's ability to handle long-term debt. In 2011 and 2012, the ratio were 27.80 and 48.28, however, in the 2013, because of the company got loss, the operating profit was minus. The ratio was -219.5, so enterprises facing the risk of debt security and stability. Because the balance sheet of current liabilities shows the dividends of the company is zero, we cannot calculate the dividend payout ratio, dividend yield ratio and price/earnings ratio. But we can know that from 2011 to 2013, the earnings per share (EPS) was decreasing from 11.18 to 2.67. Earning per share is often used to reflect the company’s operating results, measure the standard of profitability and investment risks. It is one of the important financial indicators for the investors to evaluate the profitability, forecast the growth potential of the companies and make the relevant economic decisions. For the listed companies, it is generally believed that high earning per share is better. However, this is no absolute. We should consider the source of profits and other financial and operating conditions. Some investors making investing decision often simply consider indicators of earning per share. But just rely on earning per share for investment, one-sided and isolated to treat earning per share might make you have a bias judgment on company’s profitability and growth potential. We should consider all ways and all sides of the statistics.

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