Financial Analysis of Marks and Spencer

Contents

Executive Summary 1

Introduction, Profile & Mission Statement 2

1. Ratio Analysis 3

1.1 Profitability 3

1.2 Liquidity 5

1.3 Working Capital Efficiency 6

1.4 Long Term Financial Structure 7

1.5 Investors Ratio 8

2. Challenges Faced By Senior Management 10

3. SWOT Analysis 11

4. Porter??™s Five forces Analysis 14

5. Empirical Observation of M&S 15

6. Limitations of Ratio Analysis 18

7. Conclusion 20

8. Bibliography 21

List of Figures

Figure 1.Profitability Graph for M&S 3

Figure 2.Liquidity Graph for M&S 5

Figure 3.Working Capital Efficiency Graph for M&S 6

Figure 4.Long Term Financial Structure of M&S 7

Figure 5.Investors Ratio Graph for M&S 8

Figure 6.Five Forces Analysis 15

Figure 7.Market Share of M&S, Next & Tesco 16

Figure 8. M&S Customers Chart 16

Figure 9.Reason for Disliking M&S Products 17

Excel Sheet of Ratios with Formulas 24

Executive Summary

The main purpose of this report is to evaluate the position of Marks & Spencer in terms of financial strength, market position, current performance and forecasting.

To identify M&S financial strength, current performance and forecasting, we have taken ratio analysis. SWOT analysis with the support of Porters 5 forces helped us to identify Marks & Spencer??™s market position, risks and its opportunities to fight against these risks.

The investigation on Marks & Spencer brought in our knowledge that only showing the profit does not mean that company is successfully moving towards it goals and in stable position. Liquidity ratio near 2 and low gearing also plays the major role in company??™s performance, so we can not ignore them as well.

The other main point is to never make decision on increasing share price of the company because increase in share price does not always reflect the high sale and profitability of the company, this increase could be the result of company??™s other internal operations that are hidden and would not be long term.

Sometimes multinational companies take new strategic approaches and new ideas to accomplish their goals in order to get competitive edge over its competitors. Unfortunately these new strategies sometimes fail and increase risks for business that result in new challenges to be faced by senior management.

At the end it remains with the strength of the company that how effectively and efficiently it faces the challenges, how much it satisfy its customers