Sports Direct Financial Analysis Essay

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Pages: 7
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BUSINESS ACCOUNTING

AC1010

SPORTS DIRECT INTERNATIONAL PLC.

Table of Contents

1.0 Overview………………………………………………………………………………….3

2.0 Company Background………………………………………………………..………….3

3.0 Performance during the last 5 years…………………………………………………….3

4.0 Ratios Analysis……………………………………………………………………………4 * 4.1 Earning per Share Ratio…………………………………………………..4

* 4.2 Quick Ratio……………………………………………………………….5

* 4.3 Current Ratio……………………………………………………………..6

* 4.4 ROCE Ratio………………………………………………………..……..6

5.0 Company Funding and Gearing…………………………………………………………7

6.0 Qualitative Issues………………………………………………………..………………..8

7.0 Conclusion…………………………………………………………...…..………………..8

8.0 References………………………………………………………………..………………..8 …show more content…
The peak was reached in 2011, when current ratio was £1.29. The higher the ratio is the more liquid the company is, so they can cover their liabilities.

4.4 ROCE Ratio

The graph above represents Return on Capital Employed. ROCE is used, when the company wants to find out how profitable and efficient they are from year to year. (Dyson, 2010) The graph shows that values from 2007 to 2008 declined, which means that their business is not as efficient as it was in 2007. Over the period 2008-2009 there was recorded a fluctuation of values around 24%.
5. Company Funding
The Company is funded through borrowings such as loans and overdrafts, share capital and retained profit. The graph below shows that 77% is from share capital, which is good for company as they do not have so many debts and borrowings. 35% came from retained earnings, which means that some profit is reinvested into the Sports Direct International Plc.

One of the funding methods is gearing. Gearing measure how many assets invested to the business are financed by borrowings. The lower a level of borrowings is the lower is the risk to a business. (Dyson, 2010) The graph below shows that gearing reaches a peak in 2008, so the business in this year was highly geared. From 2008 to 2011 the values have declined and the lowest value was 63.31%, which means that company paid off some of the long-term loans.

6. Qualitative issues
,,A formal Corporate
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