Company Analysis of the Financial Performance of White bread Plc Coursework

Company Analysis of the Financial Performance of White bread Plc - Coursework guinea pigThese businesses are conducted under the name of several well-known brands like the Premier Inn, the Beefeater Grill, the Brewers Fayre, Table Table, Taybarns and costa Coffee. The company provides employment to around 40,000 people all over the world. The organization in based in the United Kingdom and constitutes one of the major hospitality brands of the region. It serves over 11 million customers on a monthly basis in UK. Whitbread Plc recorded commendable financial results in the year 20110-11. The companys total revenues grew by 11.5 per cent from ? 1435 in 2009-10 to ? 1599.6 in 2010-11. The profit in advance tax recorded a handsome increase of 20.1 per cent from ? 239.1 in 200-10 to 287.1 in 2010-11. The firm also recorded a 17 per cent escalation in its full year dividend. The corresponding dividend increased from 38 in 2009-10 to 44.50 in 2010-11. Thus, overall the Whitbread Group co nsisting of the Bars, Hotels, restaurants and the Coffee Chains reported a good growth in its business operations during the financial year 2010-11. Profitability balances Profitability Ratios of a company exhibit the firms condenser to generate earnings in comparison with its expenditure incurred during a period of time. Usually, an increase in the profitableness ratios of a company over a time period indicates a good financial proceeding of the firm. (Thakuram, 2007, p.48). The Profit rim The Profit Margin is defined as the Net Income/Revenues or Net wage/gross revenue. This is usually expressed as a percentage and indicates how much the firm retains as earnings extinct of every dollar of sales The Profit Margin of Whitbread Plc has been calculated for 2009-10 and 2010-11, as follows Years Profit before Tax (million) Sales (mn) Profit Margin = Net Profit/Sales (%) 2010-11 ? 287.1 ? 1599.6 17.9% 2009-10 ? 239.1 ? 1434.6 16.7% (Annual write up of Whitbread Plc, 2009-10, 2010 -11) Therefore, the Profit Margin of Whitbread Plc has increased from 16.7% in 2009-10 to 17.9% in 2010-11. This shows that the financial performance of the company has improved from the previous year. Return on Assets (ROA) The Return on Assets is calculated by Net Income/Total Assets. This is also expressed as a percentage and gives an idea about the profitability of the company in relation to its total assets. The ROA of Whitbread Plc has been calculated for 2009-10 and 2010-11, as follows (Annual Report of Whitbread Plc, 2009-10, 2010-11) The figures indicate that Whitbread Plcs ROA has increased from 0.0009% in 2009-10 to 0.0010% in 2010-11. This shows that the pro0fitablity of the firm has increased from the last year. capacity Ratios Efficiency Ratios are utilized to evaluate how efficiently a company is able to make intent of its internal assets and liabilities. An improvement of efficiency ratios usually lead to increased profitability for the company. (Leach, 2011, p.75- 78) Sales to Inventory Ratio This is calculated by Annual Net Sales/ Inventory. It provides an idea about the inventory-to-sales ratio of the company, which can be compared over a period of time. The Sales to Inventory Ratio of Whitbread Plc has been calculated for 2009-10 and 2010-11, as follows (Annual Report of Whitbread Plc, 2009-10, 2010-11) Therefore, the Sales to Inventory Ratio of Whitbread Plc, has decreased from 0.55 % in 2009-10 to 0.54% in 2010-11. Assets to Sales Ratio This ratio is given by Total Assets/Net Sales. It provides an indication of how the firm is utilizing its assets to generate sales. The Assets to Sales Ratio of Whitbread Plc has been calculated for 2009-10 and 2010-11, as follows (Annual Report of Whitbread Plc, 2009-10, 2010-11) Thus, the Assets to Sales Ratio of Whitbread Plc had reduced from 0.018% in 2009-10 to 0.017% in 2010-11. The decline in both the Efficiency