The financial analysis is considered as the process of selection, interpretation, and evaluation of financial data with the relevant information so as to formulae the assessment of organisations based on the current and future financial aspects as well as performance. Considering this aspect, the purpose of the paper is to provide the financial analysis of Next Plc using the ratio analysis for the years 2015 and 2014. Overview of Next Plc Next Plc is one of the most renowned British multinational retailers dealing in footwear, clothing, and home products. It has more than six hundred stores around the globe from which five hundred are located in United Kingdom and Ireland and two hundred stores are in Europe, Asia, and Middle East. The …show more content…
For this purpose, organisations compare the most liquid assets, that is, short term liabilities. The above table is reflecting the current ratio for the Next while assessing the liquidity of the organisation while deriving the proportion of current assets for covering current liabilities. The current ratio of the organisation for the year 2015 is more than the year 2014, which means that the organisation is at better liquid position in the year 2015 than 2014 (Lumby & Jones, 2003). Profitability Analysis Ratios 2014 2015 EBIT £ 695.20 £ 794.80 Capital Employed £ 1,310.10 £ 1,395.70 ROCE 53.1% …show more content…
This ratio assesses the ability of organisations for generating returns from available base of capital. The comparison of net income to the sum of debt and equity of the organisation provides clear understanding of ways through which the use of leverage influences the profitability of organisations. The return on capital employed for the selected organisation for the year 2015 is higher than the return on capital employed for the year 2014 (Bull, 2007). 2014 2015 Gross Profit £ 1,240.10 £ 1,343.40 Net Sales £ 3,740.00 £ 3,999.80 Gross Profit Margin 33.2% 33.6% The gross margin is not found to be the exact estimate of the pricing strategy of organisation but reflecting the appropriate indication of financial health. The above table reflects that the gross profit margin of the selected organisation is almost similar for both years. The gross margin is reflecting the ability of the organisation for paying its operational and other expenses. The gross margin of the organisation is reflecting the stability in terms of the gross profit and profitability (Drake & Fabozzi, 2012). 2014 2015 Operating Profit £ 722.80 £ 812.10 Net Sales £ 3,740.00 £ 3,999.80 Operating Profit Margin 19.3%