Marks and Spencer Financial Statement Analysis

In other words, any competitive business organization must have a proper analysis system through which the financial activities can be evaluated. In this report, a discussion is presented about the financial statement analysis of Marks and Spencer Plc. The results are also used to make predictions regarding the future market position of the firm. Internal Factors The internal factors which influence the operations of Marks and Spencer can be analyzed in term of the company’s organizational structure, customer demand and financial performances. Organizational Structure To start with, the financial success of Marks and Spencer can be attributed to the firm’s organizational structure. This has helped the firm appropriately monitor its financial activities while also venturing into new markets. Marks and Spencer continues to maintain its financial position among the market leaders because the firm has adopted an approach of operating integrated business units.

In other words, Marks and Spencer are like a conglomerate company which combines different lines of products under one name. The company has managed to penetrate through the clothing industry by assembling some of the most unique designs of clothes for both men and women. At the same time, Marks and Spencer are excelling in the food industry as a supplier of assorted food items at very affordable prices. In return, the firm utilizes the essential data obtained from its research to customize items as per the descriptions of consumers. In addition, the company has also remained impressive in the market because its commodities are not discriminative of any culture, tradition or belief Marks and Spencer, 2018). Since Marks and Spencer has also distributed in many countries, each subsidiary is operated in a manner that recognizes and honors the cultural practices of locals.

Likewise, the company’s stores located in metropolitan areas are stocked with items that reflect inclusivity and equality of each culture. The customers’ demand patterns at Marks and Spencer has always indicated a steadily increasing trend except in the period between 1999 and 2001 when the company experienced an economic slowdown. Another important move was the firm’s decision to launch an online store where customers can check items, order and make payments through electronic means (Marks and Spencer, 2018). The incorporation of technological innovations in the company has brought positive impacts to the company such that the volume of demand has significantly increased. Marks and Spencer have also employed many workers in its physical stores who can promptly attend to customers' queries in real time.

Ratio Analysis from CW1 The financial analysis of Marks and Spencer can be determined by calculating ratios relating to profitability, liquidity, and efficiency. The profitability of the company can be determined by evaluating ratios like the Gross Profit Margin, Net Profit Margin, and Return on Capital Employed. This has resulted in the decline in its net profit margin as well as a negative trend in the company's financial records. Upon the evaluation of the company's return on capital, it was determined that Marks and Spencer registered a value of 11. 53% in the year 2015. In the subsequent years of 2016 and 2017, the company experienced a decline where the values were 9. 17% and 4. On the same note the quick ratio for the company revealed that in 2015, the ratio was 0.

31:1 and the same value was maintained in 2016. In the following year, the current ratio was 0. Therefore, it implies that the value of the company’s current liabilities is still higher than the difference between the firm’s current assets and inventory. Accordingly, the efficiency ratios that were computed indicated various implications on the firms’ performance. These values were very significant in determining the number of days which it took for the company to achieve its objectives. For instance, the duration for completing sales reviewing production. The last financial analysis was evaluated in terms of long-term financing whereby the following results were obtained. In terms of the gearing, it was determined that the ratio between the companies non-current liabilities to the capital employed yielded the following result.

In 2015, the value was 478. The first component of this model is politics. Here, it can be stated that Marks and Spencer are enjoying a peaceful political atmosphere which is favorable to the operation of the firm. However, there have reports of a decline in performances since the UK’s political decision to leave the European Union. This is because business activities of the firm were severely disrupted in many European markets since the Brexit vote (Campbell & Rahman, 2010). Another component of the model is economics. The firm strives to comply with consumer protection acts and ethical requirements of the retail industry. Lastly, environmental evaluations of the firm categorically indicate that Marks and Spencer are striving to maintain the sustainability of the environment by opting to use clean energy in its subsidiaries.