MSC FINANC
BEA18week2DUO(1).ppt

Down and car servicing 14 of revenue with gp margin

Info icon This preview shows pages 50–58. Sign up to view the full content.

down) and car servicing (14% of revenue, with GP margin up slightly) Greatest growth in revenue (4%) was in the lower margin retail segment. Greater growth in like for like (LFL) sales in cycling than in motoring. Within travel solutions cycling carriers up, but car seats down. Within car enhancement, sat navs down ,but dash cams (& fitting)up Within cycling , general bike sales now but e-bikes & PACS (parts, accessories & clothing) up. 14% growth in service-related retail sales growth: eg 42% of 3Bs (bulbs, blades & batteries) sold are now fitted in store. 12% growth in online sales, with 85% of on-line sales now collected in store, improving footfall 50
Image of page 50

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

Margins and cost Higher gross profit margins in Autocentres than retail (but Autocentres only 14% of revenue). Big range of margins within the retail sales areas (cycling, car maintenance, car enhancement & travel solutions) Upward pressure on costs through the fall of sterling against US dollar, & rise in store staffing costs (National Living Wage) “Group operating costs rose by 2.9% reflecting continued investments in our colleagues, our on-line & offline infrastructure & also more convenient fulfilment solutions for customers” (page 6). 51
Image of page 51
CFO comments on operating costs (page 36) 52
Image of page 52

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

Halfords 2018 Finance cost is down (despite slight increase in borrowings) due to “improved terms negotiated” (page 38) Interest cover has fallen due to lower operating profit. At 25.9 (69.8/2.7) it is still very comfortable. Revenue per employee continues to rise, now £101,475 per head. (note 4 states 11,186 staff members) Revenue per employee: revenue = £’000 per head number of employees 53
Image of page 53
EVALUATING COMPANY PERFORMANCE 54
Image of page 54

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

analysing company accountsAHfull Analysing Company Accounts Think about the industry in which it operates Read up about the sector Company Web site Access the latest set of published accounts Contextualise Analyse accounts over time & compare to competitors
Image of page 55
Interpretation of accounts and ratios The overview of movements and computation of ratios allows us to identify trends or fluctuations & may prompt questions & identify strengths or alternatively possible problem areas for the company In real life , findings are interpreted in the light of directors’ reports & reviews (within the annual report) and information beyond the annual report eg press commentary, scrutiny of the industry & the wider economy. 56
Image of page 56

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

Exam based interpretation In an exam , where actual economic and industrial contextual data is not available, observations on movements in reported figures (such as an increase in inventory held) or in ratios, (such as an improvement in GP ratio) will suggest possible causes and consequences of the movements observed. Improvement in GP margin could be achieved by increasing selling price and/or reducing costs (discuss efficiency and issues of quality). Such comments are of a generic nature, but must be relevant to the direction of movement observed in the particular case studied . 57
Image of page 57
Generic ways to boost profit Increase turnover, through charging more per unit and/or by selling more units (which may incur promotion costs). Improve margins by reducing costs, through efficiency measures & renegotiating deals with suppliers, consider out sourcing services (without compromising quality). Adjust product mix to focus on higher margin product lines. 58 12/01/19
Image of page 58
This is the end of the preview. Sign up to access the rest of the document.
  • Fall '15
  • Generally Accepted Accounting Principles, Halfords, accountsAHfull

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern