Financila Performance and Positioning Assignment

Financila Performance and Positioning - Assignment ExampleA communicate profit and loss account of Clinton Cards plc has also been included in this part to add to the analysis.Shareholders need to analyse the managements performance and efforts put into the company affairs through the financial results so as to realise its strengths and weaknesses. Riahi-Belkaoui (1998, p11) says, the profitability ratios portray ability of the firm to efficiently use the gravid committed by stockholders and lenders to repay revenues in excess of expenses. Therefore, the analysis for the shareholders has been done with the help of following profitability ratiosThe above chart depicts the profitability ratios for Clinton Cards plc indicating the financial performance of the company all over the last five years. Shareholders are interested in the companys profit records and being the real owners of the firms, they constantly need to appraise the companys performance. If the company is able to gener ate a stable profit for its shareholders out of its business activities, then it is said to be a good performer in the financial sense.The Gross Profit bank Percentage evaluates the percentage of profit earned by a company on sales after the achievement and distribution activities (Mcmenamin, 1999). It shows how well the company manages its expenses so as to attain maximum profit out of its total sales. Clinton Card plcs gross profit ratio shows that the company is sustaining a stable profit border with a slight increase in profitability. It further illuminates that the company manages to keep about 11% of its total sales revenue out of all the production and distribution expenses. This can also be inversely stated that the company loses about 89% of the total turnover in opposition cost of sales. The network Profit ratio shows what percentage of profit a company earns on its sales (Mcmenamin, 1999). It reveals the profit retained by a company after score for its various(a) o perating costs. The difference between the companys net and gross profit ratios indicate the amount of profit foregone by them in the course of meeting various selling and administrative expenses. Thus the above graph shows that the company manages to retain about 6% of the total sales after accounting for various operating costs. The companys net profit margin is also rising sparingly at a stable rate showing the managements efficiency in managing costs.Riahi-Belkaoui (1998, p11) says that the overstep on capital employed ratio indicates how efficiently the capital supplied by the common stockholders was employed within the firm. Clinton Card plcs return on capital employed ratio reveals that the company is having a slightly fluctuating rate of profit on the funds invested by the shareholders. However the rate of fluctuation is non high and thus the graph shows that the company gains profit as about 30% of the total equity funds. The return on asset ratio indicates the returns or profits generated after utilising the financial resources of the company determine the companys financial performance throughout the year (Meigs & Meigs, 1993). The company in consideration has had a significantly