ipl-logo

Comparison Of Next Plc And Merlin Entertainment

594 Words3 Pages

Interest Coverage Ratio
The ability of the company to pay their interest on debt in timely way is measured through this financial ratio. Interest coverage ratio is used by creditors and investors for understanding the risk and profitability of the company (Brigham & Houston, 2015). The ratio for the two companies is provided below:
Interest Coverage Ratio
Formula Earnings before Interest and Tax (EBIT)/Interest Expense
Companies Next Plc Merlin Entertainment Plc
Years 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014
EBIT 529.8 565 598.3 661.2 726.2 198 232 258 290 311
Interest Expense 25.3 23.4 25.2 24.4 25.3 144 128 124 103 64
Interest Coverage Ratio 21 24 24 27 29 1 2 2 3 5

The interest coverage ratio of both Next Plc and Merlin Entertainment is highlighted in the table and graph above. It is observed that interest coverage ratio of Next Plc is much high in comparison to Merlin …show more content…

Companies with higher equity ratio are more favourable as it shows the sustainability of company to the creditors (Khan, 2004).
Equity Ratio
Formula Total Equity\Total Assets
Companies Next Plc Merlin Entertainment Plc
Years 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014
Total Equity 133.6 232.2 222.7 285.7 286.3 505 555 617 944 1063
Total Assets 1693.5 1792.3 1854.2 1893.6 2144.6 2022 2236 2509 2702 2786
Equity Ratio 0.08 0.130 0.12 0.15 0.13 0.25 0.25 0.25 0.35 0.38

It is noticed from the table and graph provided above that Merlin Entertainment is performing as compared to Next Plc in terms of equity ratio as their equity ratio is much higher. This means that Merlin would have positive image in front of their creditors as their higher equity ratio shows the sustainability of the company. Moreover, this ratio as shows that debt service and financing cost of Merlin is lower in comparison to Next Plc.
Conclusion and

Show More
Related

Ulta Beauty Financial Statement

688 Words | 3 Pages

Sally’s Beauty Holding, Inc., who has a current ratio of 2.4, is quicker to turn their current asset into cash but also is not investing excess assets. Both companies are able to meet their debt obligations. On the other hand, Coty’s Inc. current liabilities exceeds their current assets revealing their current ratio to be .94. Having a ratio below one can imply that current assets are barely being covered by the current liabilities. Ulta Beauty’s debt-to-equity is estimated to be .65, which reveals Ulta Beauty to have a low risk and not using high amounts of debt to finance operations, because total liabilities is $1,001,660 and total shareholders’ equity is $1,550,218.

Read More

Home Depot Financial Analysis Essay

1214 Words | 5 Pages

Debt - Equity ratio was included to show that both companies are financed with a large portion of debt, yet remain

Read More

Cango Vs Amazon Turnover Ratios

505 Words | 3 Pages

In this case, we can say that Amazon performance is a lot better than CanGo. A high Debt to Equity Ratio generally means that a company has been aggressive in financing its growth with debt. Debt can come in the form of stocks, bonds, and loans that the company borrowed against. Amazon current ratio is 1.31, but CanGo current ratio is 5.33. In general we can see that CanGo is performing better in this area compared with their main competitor Amazon, because this ratio shows that CanGo is capable of repaying its debts and liabilities than

Read More

Target's Liquidity Ratios

437 Words | 2 Pages

In every being analyzed target has financed more of its assets with liabilities instead of equity and therefore the equity ratio has a declining trend. The times interest earned ratio has changed substantially over three-year period. It went from 5.14 up to 9.11 and back down to 4.95. Considering that investors look for a higher times interest earned ratio this is a negative change for Target because its ability to pay for interest on debts has been lowered by 4.16

Read More

Begin The Financial Statement Analysis Of Casey's

2522 Words | 11 Pages

Debt to equity shows the number of dollars of borrowing for each dollar of equity investment. The higher the number the riskier and the more the company relies on borrowing debt. Casey’s debt to equity ratios were 1.46 the most recent year and 1.31 the previous year. Murphy USA’s ratio was 4.02 the most recent year and 2.43 the previous year. Like debt to assets, the lower the ratio the better.

Read More

Merlin Entertainments Case Study

1294 Words | 6 Pages

I feel that after my research I can justify that Merlin Entertainments operates by the divisional (diversified) organisational type. I feel this way because the central headquarters of Merlin Entertainments supports a number of different divisions and venues that operate differently and in different locations throughout the world, Merlin have multiple divisions e.g. Alton Towers, Thorpe Park and Madame Tussauds. These operate throughout the world in numerous locations. Merlin Entertainments have a central board of directors who make the decisions that will affect Merlin Entertainments on a wide scale and all of their divisions respectively. These board of directors have the responsibility to make the correct decisions so that Merlin Entertainments

Read More

Dollarama Company Case

990 Words | 4 Pages

The debt to ratio is a ratio that compares a firms total liabilities and shareholders’ equity. It shows the proportion of the amount of money invested by the business owners as well as external entities. Debt to Equity Ratio = Total Liabilities/Shareholders’ Equity = $80,994/$931,490

Read More

Grandma's Best Swot Analysis

984 Words | 4 Pages

Overall, the increased debt is justifiable as they are producing a lot more, but it does hinder their liquidity and ability to take on more debt. In 2015 the company had a gross margin at 30.8% which was higher than the industry. This is a good indication that the

Read More

Gemini Electronics: Financial Analysis

1341 Words | 6 Pages

Though having dropped from 0.65 in 2008 to 0.63 in 2009, this is still significantly higher than 0.5. This means that 63% of Gemini’s assets are financed by debt, thus the lenders bear the greatest risk. This is because Gemini financed all land, equipment and some patents with term loans. Though the Debt to Equity Ratio conveys the same information as the Debt Ratio, we see that from 2008 to 2009 this number has dramatically dropped. As opposed to using 1.87 in borrowed funds compared to each dollar provided by shareholders like in 2008, Gemini now only uses 1.71.

Read More

Halfords: Strategic Financial Management

554 Words | 3 Pages

Halfords board publish a considerable amount of information about their strategy. These report detail Halfords board approach to risk management, their foreign exchange hedging policy, intended major investments and dividend policy. Note about information source used for calculations, reference EMT Cost of Debt Halfords report do not explicitly state the cost of debt. This has been calculated by taking the annual Net Interest charge divided by the total non-current liabilities.

Read More

Lay Man Case Study

836 Words | 4 Pages

A healthy proportion of equity capital, as opposed to debt capital, in a company's capital structure is an indication of FINANCIAL FITNESS. capital structure likewise recommends the proportion between possessed capital and acquired capital. While arranging the capital structure, fitting harmony in the middle of obligation and value is key. There is no rigid guideline in choosing the organization of capital structure. The organization can go just for value capital or the organization may choose a sure proportion in the middle of value and credit

Read More

Hill Country Case Study

968 Words | 4 Pages

When the company buy it, then only the amount of asset and liability are recorded. So, the CEO of Hill Country can keep his company’s leverage ratio and debt-to-equity ratios at lower rate. It can avoid that the leverage ratio and riskiness of the company will weaken the strength of balance sheet and periodic

Read More

Ratio Analysis Of Nike

4014 Words | 17 Pages

However, Nike seems to be doing the opposite, which is giving a high ratio. Debt per Equity Ratio = Total Debt/Total Equity  The debt per equity ratio shows to what extent a company’s assets are either financed by debt or equity. A high ratio indicates aggressiveness on behalf of the company to finance its growth through debt.

Read More

Ryanair Financial Ratio Analysis

2985 Words | 12 Pages

Term of Reference Background Objective Executive Summary Financial Ratios Formula Financial Ratios Analysis of BA and Ryanair Horizontal Analysis of Income Statement Vertical Common Size Analysis of Balance Sheet Comparison of the two companies Strength and Weaknesses Conclusions/recommendations --- Terms of Reference a) Background A success degree of one company can be measured by comparing its financial performance to its competitor. By assessing two companies, this will enable to adequately evaluate their current positions in the market, and to eventually learn as to which one of the two truly applies the better or most successful business model.

Read More

Swot Analysis Of Grace Kennedy

904 Words | 4 Pages

Cost of Capital Analysis The GraceKennedy Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for owners and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. During 2014, the Group’s Strategy, which was unchanged for 2013, was to maintain a debt to equity ratio not exceeding 100%. The debt equity ratios at 31 December 2014 is a

Read More

More about Comparison Of Next Plc And Merlin Entertainment

Related Topics

Open Document