Profitability ratios marks and spencer plc net profit

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Profitability ratios Marks and Spencer PLC Net Profit Ratio A proportion of benefit measured as net return divided by sales. Overall net profit ratio is extremely helpful when looking at organizations in comparative commercial industries. A higher net revenue shows a more profitable organization that has better control over its expenses as compared with its rivals. <Author2015> Page 26 of 68
HOW TO IMPROVE CURRENT FINANCIAL PERFORMANCE If we analyze the net profit ratio of the company last three years we see that the net profit ratio of the company is not showing any growth in last three years. So company has to improve its sales revenue and also have to decrease its operating expenses in order to improve its net profit in future years. The net profit ratio of the company were 4.92 %, 4.816 %, 5.17 % and 6.15 % in the years 2014, 2013, 2012 and 2011 Tesco Plc. Net Profit Ratio The net profit for the company can calculated by the following formula: Net Profit margin =Net profit/Sales x 100 If we analyze the net profit ratio of the company last three years we see that the net profit of the company is not showing any growth in last three years. Its net profit ratio is going down by every passing year. So company has to improve its sales revenue and also have to decrease its operating expenses in order to improve its net profit in future years. The net profit ratio of the company were 3.55 %, 3.05 % , 5.80 % and 5.90 % for the years 2014, 2013 ,2012 and 2011 respectively[ CITATION HKe092 \l 1033 ]. 2014 2013 2012 2011 0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 Net profit Margin Net Profit margin Tesco Net Profit margin Mark and spencer <Author2015> Page 27 of 68
HOW TO IMPROVE CURRENT FINANCIAL PERFORMANCE Marks and Spencer EBIT Margin EBIT (Earnings before income tax) margin is a very important financial ratio to measure the profit generating ability of the company. It shows that how well company is managing its operational activities to generate the profit for the given financial year. If we analyze the EBIT margin of the marks and spencer we notice that its EBIT margin is going down in the last four years. The EBIT margin of the company was 5.62 % , 5.62 % , 6.62 % and 8.01 % in the years 2014, 2013, 2012 and 2011. Tesco Plc. EBIT Margin It is noticed that EBIT margin of the TESCO PLC has shown a decrease in years 2012, 2011 and 2013 but it showed an improvement in the year 2014.The EBIT margin of the company was 6.041% , 2.93%, 7.39% and 11.09% in the years 2014, 2013, 2012 and 2011.This shows that company has been working hard to control its expenses and also to improve its sales. 2014 2013 2012 2011 0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 9.00 EBIT Margin EBIT Margin Tesco EBIT Margin Mark and spencer <Author2015> Page 28 of 68
HOW TO IMPROVE CURRENT FINANCIAL PERFORMANCE Marks and Spencer Gross Profit Margin Gross profit margin is one of the most important financial ratios in the financial analysis. It provides information about the margin of the company in the given financial year.

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