Friday, September 13, 2019

Financial Management at Marks and Spencer Case Study

Financial Management at Marks and Spencer - Case Study Example Marks and Spencer have achieved great success in the last three years and now it is in the progress focusing on core business and aiming at becoming more customer oriented and flexible business offering a wide selection of quality goods. The financial performance of Marks and Spencer during 2008 was extremely pleasing for the stakeholders. The total revenue has been increased by 5.1 % with highly strong performance in its domestic trade. But the total revenue was increased by 10.1 % in 2007 with high performance in both its home and international business. It is reported that during 2008, 4.8% of space on the weighted average method has been added to the general merchandise. Both Gross Margin of 38.9% and Net Margin of 12.2% show better performance than its last year's financial state. During 2007 profitability has been increased to 11.2% from 9.6% and 7.4% of 2006 and 2005 profitability records respectively. It shows the success achieved by Marks and Spencer in its business operation both in domestic and international trade. Marks and Spencer's UK retail has been accounted to be '8,309.1m during 2008, but it was '7,975.5 m and '7,275 in 2007 and 2006 respectively. The international retail trade of M&S was '522.7 min 2006 and '610.6 in 2007, and the international trade in 2008 has been increased further and accounted to be '712.9m. Group operating profit has also been constantly increasing for the last few years. Group operating profit of its UK retail business has been accounted to be '972.9m in 2008 with a slight increase from the figure of '956.5 min 2007. Group operating profit of its international trade has been accounted to be '116.4m in 2008 with an increase of '28.9 m from 2007's figure of '87.5m. In short, both domestic and international trades of Marks and Spencer have been constantly increasing for the last few years and getting a rather outstanding loyalty brand name among the customers. Operating profit on property disposals was '27 million but it was 1.9 million during 2007. The report also shows that the general merchandise gross margin was up by 120 basis points to 52.6% which was caused by improved buying. Net finance costs before exceptional items were increased by 4.3% after pension finance income of '58.9 million, but it was 20.8 million in 2007. Net finance cost during 2007 has been reported to be decreased to18.3% reflecting a reduction in the average net debt. Earnings per share have been increased by 28.7% to 40.4p per share that reflected as a great advantage to attract more investors than before. Cash outflow has been reported to be '917.5 million in 2008 but cash inflow during 2007 was very strong as it generated a net cash flow of ' 231.1 million in 2007. In 2007, Cash inflow from continuing operating activities had been increased by '259 million. Cash inflow from continuing operation in 2008 has been decreased by '206.6 million that has reflected a higher working capital outflow. In 2007, there was a reduction in cash outflow on leasehold repayments as compared to 2006 and hence it resulted in an increase in the working capital which was accounted to be '114.1 million.  

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