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    BLK6 1819 Evaluate The Financial Statements

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    BLK6 1819 Evaluate The Financial Statements


    BlK6 1819

     Introduction

    A company is always being evaluated on the basis of its financial performance. A company, which has a good financial health is considered to be good in operations and management. A company with a healthy financial condition can capture the market more than others with less healthy financial conditions. To evaluate any financial conditions of any firm ratio analysis is the best way to evaluate them. Ratio analysis refers to the calculation of the different structure of the firm. When calculating any ratio, it focuses mainly on two variables related to it. There are mainly four types of ratio analysis being calculated in considering a firm’s financial health. These are Liquidity, Efficiency, Gearing, and Activity ratios. These measures the company’s profitability and how much they are capable of generating much profit. Here, we are going to discuss the Kingfisher Plc financial statement analysis. Analysis of the company's ratios. This report is designed to discuss the ratio analysis of Kingfisher Plc over the year from 2016 to 2018. From the beginning, we are going find the corporate objectives of the Kingfisher Plc, and their changes over the last three years, and will try to discuss the reason behind the changes in the overall corporate objectives over the last three years. Secondly, we will compare the financial ratios of Kingfisher Plc with the other company having the same qualifications as Kingfisher Plc's. Here, for the comparison, we choose Travis Perkins PLC as it has similar quality to the Kingfisher Plc. And finally, we will discuss the opportunities and the obstacles of the firm and the reasons behind these opportunities and obstacles. This report is designed to provide the overall procedures in comparing two similar quality firms against each other on the basis of their financial statement analysis known as ratio analysis.

    Background of the company

     

    Kingfisher Plc is a British based multinational retailing company having the headquarter in London, with other regional offices established all over the United Kingdom and in The Repu

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    blic of Ireland in places like Dublin, Edinburgh, and Cardiff. It is known as the largest home improvemen

    t retail

    ing business in Europe, and third largest in the world. The company was founded in 1982 from the buyout by the Woolworths chain by Paternoster Stores Ltd.

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    Objectives:

    ·       To become the chief home development firm in the world.

    ·       Focusing on expanding market as well as improving services.

    Changes in the Corporate Structure:

    ·       Kingfisher Plc. has a five-year plan which started in 2016/17, which is expected to deliver a £500 million sustainable annual profit uplift by the end of Year 5, over and above ‘business as usual'. Until the second year of the plan has done excellently by achieving the key strategic milestones. It is currently developing improved training programmers and engagement schemes for their colleagues.

    ·       Increased number of stores from 1176 to 1300 around the globe.

    ·       Building a home improvement academy for the employee for the betterment of services.

    ·       Increased sales from 28% (in 2016/17) to 32% (in 2017/18).

    Key Opportunities:

    As a part of the business, any company has to have to wait for the opportunity and grab it when the time is perfect. Key opportunities of the Kingfisher Plc.

    ·       Teaming up with Shelter, the UK's leading house charity. In a new partnership, it can help the people to improve their homes and ultimately to improve their life.

    ·       New country development has opened a new opportunity for the Kingfisher Plc as a part of developing that country's housing.

    Five Years Strategic Plan:

    Following an in-depth review of Kingfisher’s businesses, alongside detailed studies of our customers’ home improvement needs, we announced the ONE Kingfisher transformation plan in January 2016. This plan will leverage the scale of the business by creating a unified company, where customer needs always come first. Kingfisher Plc. has a five-year plan which started in 2016/17, which is expected to deliver a £500 million sustainable annual profit uplift by the end of Year 5, over and above ‘business as usual'. (© Kingfisher plc , 2018) 


     Gross Profit Margin

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    Kingfisher Plc's gross profit margin in the year 2016, 2017 and 2018 is 37.30%, 37.20%, and 36.90% respectively. Based on the gross profit margin, a company is considered good and efficient when the gross profit margin is at an increasing rate. The more gross profit margin is good for any company. Here, The Kingfisher Plc’s gross profit margin is in a decreasing rate but that’s not too bad rate after all. Also, the competitor company Travis Perkins Plc’s gross profit margin decreases over the time period. Their gross profit margin is 29.79%, 29.62% and 29.60% in the year 2016, 2017 and 2018 respectively. But in comparing both companies, Kingfisher Plc's gross profit margin is better than its competitors.

    Operating Profit Margin

    Operating Profit Margin