Accounting & finance -Ratio analysis of company NEXT

Essay by lustercherryUniversity, Master'sB+, December 2008

download word file, 9 pages 2.0

Next is a UK based retailer offering stylish, good quality products in clothing, footwear, accessories and home products. Next distributes through three main channels: Next Retail, a chain of more than 480 stores in the UK. The Next Directory, a direct mail catalogue and transactional website with more than 2 million active customers; and Next International, with more than 140 stores overseas. www.nextplc.co.ukRatio analysis:Ratio analysis is a powerful tool of financial analysis. It states that the quotation of two mathematical expressions explain the relation between two or more things. The ratio analysis is mainly used for evaluating the financial position and also the performance of the particular firm. For purpose of preparing the ratio analysis the balance sheet, Income statement& cash flow statement play the vital role. The ratio analysis is mainly useful for the comparison of past performance with the present performance and to predict the future.

The ratio analysis mainly used for the following purposes.

1. Weather the financial position of the company is sound or not2. Is capital structure good or not3. To calculate the profitability of the company4. The firms credit worthyIn simple the ratio analysis analyses the firm's wealth, health &solvency find the efficiency. The ratio analysis mainly concerned with the economic situation of the firm for anticipating its future course of actionA study of the relationships between financial variables. Ratios of one firm are often compared with the same ratios of similar firms or of all firms in a single industry. This comparison indicates if a particular firm's financial statistics are suspect. Likewise, a particular ratio for a firm may be evaluated over a period of time to determine if any special trend exists. Compare trend analysis horizontal analysis, vertical analysis. (http://financial-dictionary.thefreedictionary.com/ratio+analysis)Performance Ratio's1) Return on capital employed (ROCE)This ratio measures the effectives with...