Interpretation of Financial Statements Essay Example | Topics and Well Written Essays - 1750 words

Interpretation of Financial Statements - Essay Example With the help of this information one can compute financial ratios relating to liquidity, profitability, gearing and efficiency that help in assessing the financial performance of the company. ... 8594 33607 Acid-test ratio 0.97 1.13 Â   1.19 0.82 Â   Â   Â   Â   Â   Â   Cash and short term deposits 107 47.8 Â   13698 4660 Current Liabilities 758.1 713.5 Â   28594 33607 Cash ratio 0.14 0.07 Â   0.48 0.14 Â   Â   Â   Â   Â   Â   GEARING Â   Â   Â   Â   Â   Total equity 133.4 140.5 Â   66230 62166 Long term debt 802 906.4 Â   1316 575 Long-term debt to equity 6.01 6.45 Â   0.02 0.01 Â   Â   Â   Â   Â   Â   EBIT 529.8 478.3 Â   19782 17161 Interest expense 25.3 50.8 Â   374 307 Interest cover 20.94 9.42 Â   52.89 55.90 Â   Â   Â   Â   Â   Â   INVESTMENT Â   Â   Â   Â   Â   Price 2,053.00 1,177.00 Â   652.5 25.8 EPS 188.50 156.00 Â   32.6 29.6 P/E ratio 10.89 7.54 Â   20.02 0.87 Â   Â   Â   Â   Â   Â   DPS 66 55 Â   16.65 17.15 EPS 188.5 156 Â   32.6 29.6 Dividend payout 0.35 0.35 Â   0.51 0.58 Â   Â   Â   Â   Â   Â   EPS 188.5 156 Â   32.6 29.6 DPS 66 55 Â   16.65 17.15 Dividend cover 2.86 2.84 Â   1.96 1.73 Â   Â   Â   Â   Â   Â   DPS 66 55 Â   16.65 17.15 Price 2,053.00 1,177.00 Â   652.5 25.8 Dividend yield 3.21% 4.67% Â   2.55% 66.47% (Next Plc, 2010; Ted Baker, 2010). Financial analysis of Next Plc (NXT) & Ted Baker Plc (TED) Profitability- For the financial year 2010 the gross profit margin of both the companies has increased as compared to the last year. Ted Baker reported a gross profit margin of 58% in 2009 and this increased to 61% in the following year whereas Next Plc reported a margin of 27% in 2009 and it increased to 29% in the immediate year. The gross profit margin of the former is more than double that of latter; this implies that the management of Ted Baker has exercised efficient control over the operating costs. However the operating profit margin of Next Plc is marginally higher than Ted Baker Plc. For 2010 the former reported an operating profit margin of 15% as compared to12% by Ted Baker Plc. This suggests that