Table of Contents Introduction 3 Profitability Analysis by Sinthusa Muralitharan 4 Working Capital Analysis by Saranya Ratnasingham 9 Conclusion on Next Performance 13 Recommendation 14 Reference/ Bibliography 15 Appendices 16
Introduction Next is one of a main UK based retail company. It offers fashion and accessories for men, women and children as well as full range of home-wares.
In this assignment we would be looking at Performance Ratios of Next and how well they are doing through 2008 – 2012. We have looked more in depth on their profitability and working ratio analysis.
Profitability Analysis by Sinthusa Muralitharan…show more content… However in 2011 the working capital ratio has been increased high then 2010 but not high as it was in 200 and 2009. The working capital is consistent in 2011 to 2012 where there are chances for it to go change.
Stock (inventory) Days
Stock in Days is a ratio company uses to determine, on average, how many days’ goods spend in inventory. The above graph shows the stock days details of Next plc. The graph clearly explains that in 2008 the stock days for ‘Next’ is low and in 2010 it’s lower than 2008. Low ratios of the stock day’s means the goods do not stay on the shelf for long and it moves through the store quickly. This means that the business in Next may not be stocking sufficient to convene the demand, which may force customers to go different places to meet up their requirements.
However the stock days have increased in the year of 2011 and it has been also improved in the year of 2012. As the ratio of the days in inventory is high it means that the stocks are in the store for long time. This is benefit able for the company as the stock will come more expensive if the stocks stay in the shelf for long. This is also an advantage for the company as the high ratio also means high overhead for Next business.
Debtor (Receivable) Days
The debtors' turnover ratio shows how quickly a company collecting the debts that are due to them. Above is the graph of debtor’s
