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COVENTRY UNIVERSITY SCHOOL OF ENGINEERING Postgraduate Engineering Programs Financial Statement Analysis Report on Somerfield plcs performance and financial position MODULE LEADER Mr GRAHAM SARA STUDENTS NAME AMIN SAADAIE Session date 200405 TABLE OF CONTENTS I- INTRODUCTION3 II- PERFORMANCE4 RETURN ON CAPITAL EMPLOYED ROCE4 RETURN ON SALES ROS AND ASSET TURNOVER5 GROSS PROFIT MARGIN GPM6 STOCK HOLDING PERIOD7 DEBTORS DAY8 CONCLUSION9 III- FINANCIAL POSITION10 CURRENT AND LIQUID ACID TEST RATIOS10 GEARING RATIO11 INTEREST COVER RATIO12 CONCLUSION13 IV- CASH FLOW14 THE IMPORTANCE OF CASH MANAGEMENT14 SOMERFIELD PLCS CASH FLOW14 V- REFERENCES16 VI- APPENDIX17 I- Introduction The purpose of this report is to analyse the Somerfield plc Companys performance and financial position In chapter II the companys performance is evaluated by profitability and efficiency ratios and some conclusion are drawn In chapter III by relying on liquidity and gearing ratios the financial position of the company is discussed Finally the importance of cash management is described and the cash situation of the company is analysed in chapter IV The two competitors in the same industry which were the J Sainsbury plc and Tesco plc were chosen for assessing the ratios The outcomes of calculating same ratios for these companies were compared with a set of four-year trend in Somerfield plc Companys ratios In order to evaluate the ratios all of them are benchmark against Time Industry competitors and Expectations TIE method II- Performance Return On Capital Employed ROCE ROCE is one of the most important ratios for measuring performance of companies The ratio expresses the relationship between the companys profit and total capital which is invested in the company Therefore the more ROCE shows that more profit has been generated by certain amount of
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