William Hill Plc and Reckitt Benckiser Group Plc - Case Study Example

William Hill Plc and Reckitt Benckiser Group Plc Executive Summary The objective of this report is to highlight and analyze the financial position of William Hill Plc and Reckitt Benckiser Group Plc based on the financial data of the last five years. With this objective at the backdrop, during the analysis, the report has compared the financial strength and weakness of both the companies. The report has also tried to recognize the financial position and opportunities of the companies. In order to analyze the financial position, the report has evaluated profitability, financial conditions, investment and gearing ratios of both companies. Moreover, the study has also identified the non-financial measures through which both the organizations have maintained their competitive advantages and sustainability in global market place. Simultaneously, it has identified the importance of bother reporting in case of financial report along with its risk and benefits. In this context, the report reveals that William Hill Plc is highly efficient in some financial aspects. On the other hand, in case of Reckitt Benckiser Group Plc, it has been identified that the company holds a strong position in term of its financial position. Moreover, the company has been growing more significantly during the last five fiscal years. Furthermore, the report has also helped to identify the importance of financial analysis, through which organizations can improve their working capital, asset and cash flow requirements. Additionally, the report identifies that both the companies have strictly adhere to the code of corporate governance of London Stock Exchange. At the same time, both the organizations have designed and maintained their corporate environment accordingly. Table of Contents Executive Summary 1 Introduction 3 Overview of William Hill Plc 3 Overview of Reckitt Benckiser Group Plc 4 Section 1: The Ratio Analysis 4 Profitability Ratio 4 Financial Management Ratios 6 Gearing Ratio 8 Investment Ratio 10 Non-financial Measures 12 Section 2: Reporting Requirement 14 Benefits and Risks of Reporting 14 Disclosure of Financial and Nonfinancial Reporting 16 Conclusion 16 References 19 Appendices 26 1.Profitability Ratio 26 2.Financial Management Ratios 27 3.Gearing Ratio 28 4.Investment Ratio 29 Introduction The aim of the report is to conduct a comparative analyze of William Hill Plc and Reckitt Benckiser Group Plc on the basis of their current business model and business report. Additionally, the report aims to identify the procedures based on which these companies are making money and operating their businesses on a global context. In this context, the report emphasizes financial analysis, operational review and industry analysis in order to compare the financial performances of William Hill Plc and Reckitt Benckiser Group Plc. The comparative analysis would help an organization to evaluate its position and effectiveness in the present competitive market. Apart from this, through the help of comparative analysis it is possible to identify the contribution of the organization toward the industry. Moreover, by conducting comparative analysis, an organization can recognize their threats and challenges and accordingly, it will assist to enhance the productivity. Furthermore, the comparative analysis will help to identify the major factors in which companies have invested larger amount of capital during the last few financial years in order to enhance their business performances and to maintain sustainability for a long-term period (TD Bank, 2014). Overview of William Hill Plc William Hill Plc was founded in the year 1934 and since then the company has attained unprecedented growth and expansion. Over the years, William Hill Plc has been operating its business operations in the field of gambling. The company offers betting products to the consumer such as betting terminals and electronic casino-style games. In addition, the company has recently introduced innovative gambling gaming machines for consumers. However, William Hill Plc has ensured anti-money laundering, fair and open gambling by preventing crime. The company is listed in the London Stock Exchange under the constituent of the ‘FTSE 250 Index’. The company has more than 17,000 employees in nine different countries (1William Hill, 2014; 2William Hill, 2014). Overview of Reckitt Benckiser Group Plc Reckitt Benckiser Group Plc is a public limited company, which is operating its business operation especially in the UK. Benckiser (1823) and Reckitt & Sons (1840) operated their business operations separately. During the year 1938, Reckitt & Sons had merged with J&J Colman. Furthermore, during the year 1999, Reckitt & Colman merged with Benckiser in order to enhance their competencies in the global market place. Over the years, the company has offered health, hygiene and home care products to the customers. Recently, it has been recognized that the company has more than 24,500 employees in the global market (Reckitt Benckiser Group plc, 2014; Reckitt Benckiser Group plc, 2013). Section 1: The Ratio Analysis Profitability Ratio In financial analysis of a company, profitability ratio is usually used to analyze financial performance in order to understand the percentage of gross profit on the sales revenue. Apart from this, profitability ratio also helps to identify and measure the efficiency level of a company in terms of its total asset and sales revenue. Thus, it can be asserted that profitability ratio is a measure through which it can be possible to review the capacity of a company in terms of making profit (1Education Portal, 2014). The report is intends to analyze the profitability ratio of both these companies i.e. William Hill Plc and Reckitt Benckiser Group Plc. Various types of profitability ratios are used to assess the profitability of an organization, among which, few have been illustrated in respect to William Hill Plc and Reckitt Benckiser Group Plc below. Gross Profit Ratio The gross profit ratio helps in measuring the company’s profit over the cost of goods sold. This ratio also helps to measure the management’s efficiency in managing the labor and the use of raw materials (Melville, 2014; Greuning & et. al., 2011). Asset Turnover Ratio The asset turnover ratio helps to measure the amount of revenue generated from the sales turnover over the total assets of the company. The asset turnover ratio is standardized on the effect that the higher the asset turnover ratio it is better for the company (1Education Portal, 2014). By calculating the above to ratio, the company can ensure its profitability ratio and can also determine the managerial procedures that it plans to develop in the long run. Moreover, profitability ratio of a company signifies the operational performance undertaken by an organization in a financial year. In this context, profitability ratio indicates that gross profit margin and asset turnover ratio of the William Hill Plc have increased remarkably over the last four years. However, it has been recognized that during the year 2013, the gross profit margin and asset turnover ratio have decreased, which signified that the company has faced certain challenges in the financial years. On the other hand, it has been perceived that the profitability ratios of Reckitt Benckiser Group Plc have been fluctuating during the last five years in terms of its gross profit margin and asset turnover ratio. Moreover, it has been identified that William Hill Plc has lost its gross profit ratio 4.92% during the year 2012-2013, whereas the gross profit ratio of Reckitt Benckiser Group plc has risen approximately to around 1.55%. Similarly, in case of asset turnover ratio, Reckitt Benckiser Group plc has maintained its revenue and asset proportion, whereas William Hill Plc has lost 0.04% of its asset turnover ratio. In this regards, it has been recognized that reduction in net sales has decreased the gross profit and asset turnover ratio for Reckitt Benckiser Group plc in the year 2013. This can possibly be a reason that the total assets of the later company has increased with respect to the former company. Parallel to the above changes, the gearing ratio of Reckitt Benckiser Group Plc has also increased. Whereas, William Hill Plc has also developed with respect to revenue and total assets but the rate was not so much as that of the Reckitt Benckiser Group Plc (Reckitt Benckiser Group plc, 2013; William Hill Plc, 2013). Financial Management Ratios Financial management ratios denote the accounting cycle of a company. The company usually applies financial management ratios in order to evaluate the entire financial scenario for a business firm. Most of the companies usually consider financial management ratios for measuring efficiency and productivity of the businesses on a yearly basis. Moreover, it can be also asserted that by applying financial management ratios, companies are able to determine current asset and liability, working capital, liquidity and earnings per share status among others (2Education Portal, 2014). In order to calculate the financial management ratios the major ratios that are taken into consideration are as follows: Current Ratio Current ratio helps to measure the company’s ability to pay its short term obligations. Moreover, the current ratio helps the company to identify its total amount of current assets to meet its short term liabilities in the short run (2Education Portal, 2014; Melville, 2014). The standard ratio for the current ratio should be 1 to 1.5. This signifies that to meet one unit of Current liabilities there should be 1-1.5 units of current assets (Melville, 2014). Liquid Ratio Liquid ratios take into account the current assets other than stock i.e. the current assets that can be converted into cash at the earliest. Liquid ratio ensures the company’s ability to pay off its short term obligations. As per the assumption considered in the calculation of this ratio, the greater the liquid ratio the more is the margin of safety for the company to meet its short term debt (2Education Portal, 2014; Melville, 2014). The standard liquid ratio is 1:1 i.e. for every unit of current liabilities or short term debts the company should have a reserve of one unit of liquid assets i.e. Current Assets-Stock which can be converted into cash (Melville, 2014). The current ratios of William Hill Plc shows a positive trend in the initial years, which suggests that the company will be able to meet its short term obligations. However, during the last two years i.e. 2012-2013, the current ratio has further deteriorated suggesting that the company has worsened from its previous financial position. This signifies that the company is very risky for making investment, as the current ratio is negative, which is considered as adverse to the mentioned accounting standard. On the other hand, the current ratio of Reckitt Benckiser Group Plc has been fluctuating over the last five years but always remained below the standard current ratios. Moreover, the liquid ratios have not depicted much diversity for both the companies. This suggests that the inventory was not having a huge impact on the current ratio. Even though Reckitt Benckiser Group Plc was showing a better trend than the other company, but both the companies are required to manage their short term assets and liabilities efficiently. This would ensure that the companies would be successful in meeting their short term obligations easily (Reckitt Benckiser Group plc, 2013; William Hill Plc, 2013; Melville, 2014). Gearing Ratio Gearing ratios are used as a financial risk indicator, through which organizations can measure the proportion of debt. Apart from this, gearing ratios also help in measuring the equity proportion for a company. High proportion gearing ratios represent a company’s position in terms of debt and equity, which indicate that the company is dealing with high leverage of debt during its operations. It may also raise difficulty for a company to collect their debt amount. On the contrary, low proportion gearing ratios represent that a company is facing challenges in terms of debt and equity. Moreover, low proportion gearing ratios raise certain problems for a company relating to lack of dividend offering, insufficiency in cash flow and debt repayment among others. Thus, it can be evidently asserted that with the help of gearing ratios, including debt to equity ratio, times interest ratio, equity ratio and debt ratio, the liquidity position and the financial investment capacity of companies can be measured (Accounting Tools, 2014). The gearing ratios are calculated by the following ways: Debt-to-Equity Ratio The debt equity ratio signifies the shareholder’s equity and debt that is used by the company to ascertain its assets. The ratio ensures the company’s credibility to meet its long term debt. The debt equity ratio indicates the company’s fraction of equity to debt that a company finances. The high amount of the debt to equity ratio ensures that the company has been using debt financing to ensure its growth. This helps the investor to assess the risk the company is related to (Peterson-Drake, 2011). Equity ratio The equity ratio is a gearing ratio that helps to ascertain the total amount of equity that a company trades against the total amount of assets. The two major financing concept that are incorporated within the ration helps in measuring the sustainability and the solvency of the business in the long run. The higher the equity ratio it is more favorable for the company (Peterson-Drake, 2011). In order to identify the potentiality of William Hill Plc and Reckitt Benckiser Group plc in term of their equity, debt and asset, gearing ratios have been analyzed and evaluated. In order to analyze the gearing ratio, debt-to-equity ratio of William Hill plc is identified to increase by 0.55%, which is much better than that of Reckitt Benckiser Group plc. On the other hand, the debt-to-equity ratio of Reckitt Benckiser Group plc has reduced by 0.16% this is as the shareholders equity has increased. However, it has been observed that the fluctuation did not show a huge gap as the sales turnover has also increased. In the case equity ratio, it has been observed that both the company has struggled to maintain their growth during the last five financial years. Similarly, in the case of the William Hill Plc the equity ratio has reduced by 0.13% during 2012-13. This is a reason that the total assets value has increased in a greater ratio than the increase in the shareholder’s equity, which resulted in the reduction of the equity ratio. In this context, the proportion of equity and asset of Reckitt Benckiser Group plc has increased by 0.03% during the year 2012-13 (Reckitt Benckiser, 2013; William Hill Plc, 2013). While considering the respective gearing ratios for both the companies it could be understood that the companies were having a low to moderate equity ratios. This suggests that the companies should be managing their equity, debt and assets to attain a financial favorable position in the long run. The negative figures of shareholder’s equity suggest that the shareholder’s would owe money even if all the assets were sold out. This suggests that William Hill Plc needs to develop their financial position in the short run. This also shows that the company is likely to face a huge meltdown if the financial positioning is not dealt with immediately. Moreover, the company needs to enhance its financial management in order to develop its financial positioning and to trade well in the larger domain. On the other hand, Reckitt Benckiser Group Plc has a better gearing ratio suggesting that the company is likely to grow in the long run (Reckitt Benckiser, 2013; William Hill Plc, 2013). Investment Ratio Investment ratio is applied to identify the current potential of the company in the market segments. Additionally, investors with the aim of making investment decisions analyze investment ratio. The ratio also helps to identify a company’s earnings during a financial year. Moreover, the ratio will assist in recognizing the approximate dividend payout amount for the future period (Accounting Tools, 2014). Accordingly, to calculate the investment ratios the Dividend per Share and the Price Earnings Ratio are calculated. The ratios are defined in the following ways: Dividend per Share (DPS) Dividend per share helps to calculate the total amount of the dividend earned by the investor from the investment. The ratio helps to ascertain the total amount of Return on Investment (ROI) that an investor can earn from investing into the share. The higher the DPS ratio the company is likely to earn more amount of investment (Peterson-Drake, 2011). Price Earnings Ratio Price earnings ratio helps in valuation of the shares in order to ascertain the total market value of the share in comparison to the earning that the share gets from the market. The high P/E ratio of a company trends towards the fact that the investors expect more ROI from the company (Peterson-Drake, 2011). While contrasting the P/E ratio of the two companies it is quite evident that the William Hill Plc was having a fluctuating index. For instance, the company has been enjoying a high P/E ratio in the year 2009. This had however decreased over the years and the company could not reach its older position in the next five years. Conversely, P/E ratio has not developed so much but has been showing a positive trend over the period of 2011-2013. This trend suggests that the company has successfully been able to develop its reliability among its investors. On the other hand, Reckitt Benckiser Group Plc was also having a fluctuating P/E ratio this could be ascertained by following the trends of the five years. The company was having a stable ratio during 2009-2010, which further decreased in the following two years. However, the company recovered its reliability and credibility amid the investors that could easily be reflected from the high ratio in the year 2013 (Appendix 4; Yahoo! Inc, 2014; Reckitt Benckiser, 2013; William Hill Plc, 2013). Correspondingly, the DPS ratio has been suggesting a positive trend over the tenure of the five years for the William Hill Plc. Moreover the DPS ratio has also been evident to be less fluctuating than the over the five years trend (Appendix 4). This suggests that the company has been successfully maintaining their valuation ratios and has been successfully maintaining the valuation of the share in comparison to their market valuation. Similarly, Reckitt Benckiser Group Plc has also been managing their DPS ratio successfully as the calculations suggest a positive trend. Moreover, this helps in ascertaining the company’s credibility in the long run. Conversely, while comparing the DPS of the two companies it is evident that the Reckitt Benckiser Group Plc shows a better trend than the William Hill Plc. This could be because the former is dealing in the retail products while the later in antimony laundering. The trend even suggests that the investors anticipate a better ROI from the former company (Appendix 4, Reckitt Benckiser, 2013; William Hill Plc, 2013). Non-financial Measures Non-financial measures are the advisory approaches, through which organizations would emphasize shareholders’ value such as customer satisfaction, innovation and quality of management among others. Moreover, non-financial measures also aid companies to improve its internal performances and external environment during crisis phase. At the same time, non-financial measures help a company to ensure its long-term performance and future sustainability. Furthermore, the approach helps companies to analysis their financial performance and accordingly, incorporate useful framework to reduce unfavorable challenges while conducting business activities (Ghosh, & Wu, 2007). The non-financial measures of the Reckitt Benckiser Group plc revealed that the company has improved its employee engagement and ensured satisfaction by providing better opportunities, a positive work environment and effective communication system. Apart from this, the company has also offered rewards to motivate employees. Simultaneously, Reckitt Benckiser Group plc has improved its public relation with the aim of satisfying stakeholders. Furthermore, the company has also maintained the quality of the products in order to meet the satisfaction needs of consumers (Reckitt Benckiser Group plc, 2013). On the other hand, William Hill Plc has enhanced efficiency level of betting products to satisfy consumers. It has been identified that the company has improved its betting terminals and electronic casino-style games. In addition, the company has recently introduced innovative gambling gaming machines for consumers. Moreover, it has ensured anti-money laundering, fair and open gambling opportunities by preventing crime tendency among consumers (William Hill Plc, 2013). Section 2: Reporting Requirement Benefits and Risks of Reporting In the present business scenario, it is a mandatory requirement for any company irrespective of their holdings to disclose details of their operation through annual report. Information disclosed by a company helps the investors to make investment decisions as well as influences the capital market activities. The most important role of reporting for a company is to provide a relevant, reliable and useful financial data for investor to make useful decisions for future investment decisions. The two major type of reporting that is to be provided by the companies are classified into two groups that are compulsory reporting and voluntary reporting (Binh, 2012). The mandatory disclosure of financial reporting includes basic requirements of the accounting report to be presented by the company as per the regulations of the governing bodies. Accounting reports acts as a basis, which helps in building a better position in the market (Khan, n.d.). By providing a complete disclosure of the financial and non-financial operations, a company increases its transparency among the investors. The different accounting principles and guidelines that are prevalent in the different countries make it mandatory for organizations to enhance their quality of reporting. The voluntary and involuntary disclosure of the financial policies helps in providing further details of financial performances and reduces uncertainty amid investors. This disclosure of the companies follows financial disclosures as per the declaration made under International Standard on Auditing (ISA) (The Auditing Practices Board, 2009; Iatridis & Alexakis, n.d.). However, financial disclosure has often proved to implement a negative impact on the growth of companies. The detailed disclosure of companies accounting reports has led to the loss of privacy for an organization. Moreover, companies detailing projected plans through financial reporting would be at the risk of losing opportunity in relation to competitive positioning (Barry, 2005). Conversely, Depoers (2000) claimed that disclosure of voluntary information would enhance substantiality of a firm. The detailed disclosure of accounting information would aid in improving the quality of information and in increasing the acceptability of a company’s financial reports. Moreover, a detailed reporting of financial statements enhances the credibility of an organization among its stakeholders. Contrary to the above, organizations needs to tradeoff between positive and negative effects of the disclosure of financial reports. In this regard, companies are .required to follow minimum reporting principles with the aim of enhancing transparency of a company’s financial positioning (Depoers, 2000). The company even increases their acceptance by detailing out the corporate responsibility that organizations have been undertaking in order to enhance their corporate excellence (Ronena & Yaarib, 2002). Additionally, the disclosure of the involuntary reports enhances the acceptance of a company among investors and helps in reducing the cost of debt. By reporting about the accounting positioning, a company can enhance the level of sustainability in the long run. In order to perform a detailed disclosure of their financial reports, organizations has are able to enhance decision-making structures and reorganize their internal management accordingly. In this context, companies would be able to enhance corporate reputation in a society and would further develop their level of social responsibility (Ernest & Young, 2003). Disclosure of Financial and Nonfinancial Reporting The disclosure of financial and non-financial accounting enhances sustainability and credibility of organizational performances. Non-financial disclosure helps in enhancing the acceptability of an organization among its investors. Accordingly, to maintain their relationship with their stakeholders as discussed under the agency theory the major financial disclosures through annual report ensures in developing a better relationship with investors and other stakeholders. The companies should be making disclosures of financial information and performances, as per the rules mentioned under the ISA norm. In this context, disclosure of annual reports would ensure that the companies have been disclosing real financial position. Thus, it can be comprehended that the financial statements of a company is required to be disclosed on the basis of certain standards and policies in order to ascertain that financial reporting is conducted in an efficient manner in order to avoid material misstatement (Binh, 2012). Conclusion William Hill Plc and Reckitt Benckiser Group Plc are renowned companies performing moderately in their respective fields. By analyzing the different ratios, it is evident that William Hill Plc has been successfully maintaining their Gross Profit Margin over the net sales than the later company. By the same mechanism of maintaining net sales, the company has also been maintained its position in relation to asset turnover ratio. Both the companies have their current ratio below the standard current ratio margin i.e. (Current Assets/ Current Liabilities) Hence, both the company should be able to develop their working capital efficiently to meet their future obligations. William Hill Plc and Reckitt Benckiser Group Plc have been evidencing huge fluctuations in the debt-equity ratio over the tenure of last five years. Conversely, the mode of operation of Reckitt Benckiser Group Plc is based on consumer goods due to which it possesses a better competitive advantage. Moreover, it can also be argued that William Hill Plc has been operating successfully in its mode of business. By comparing the accounting reports, William Hill Plc and Reckitt Benckiser Group Plc are identified to disclose their financial as well as nonfinancial reports in an efficient manner. In this context, both the company has been effectively maintaining their corporate positioning in the long run by detailed disclosure of their mode of operation. The financial statements of the companies consist of detailed information relating to acquisition and cash transactions in order to provide stakeholders a clear picture about their investment activities. From the analysis of different ratios, it has been evident that though William Hill Plc possesses a positive gross profit margin, the company is inclined towards a risky investment domain. Moreover, Reckitt Benckiser Group Plc is observed to manage its short and long term activities in a successful manner making it convenient for the investors to invest. It has also been observed that the line of business Reckitt Benckiser Group Plc has been trading in suggests a positive growth in the future. By observing the DPS and the P/E ratios, it can be ascertained that both the companies are under a phase of expansion owing to which depict a fluctuating index of the ratios. Based on the overall evaluation of the ratios, William Hill Plc is positioned efficiently than the other company. In this regard, the companies need to develop their position at both the short and the long term level by managing its short and long term assets in an efficient manner to meet its obligations in the long run. Thus, it can be recommended that the companies must be dealing with their financial positioning in an efficient manner. Moreover, by observing the current ratio, it can also be recommended that the company should be managing their short term assets and liabilities such that they can maintain the financial reporting standards as mentioned in the accounting standards. References Accounting Tools, 2014. Gearing Ratio. Financial Ratios. [Online] Available at: http://www.accountingtools.com/gearing-ratio [Accessed August 30, 2014]. Barry, P., 2005. Mandatory Financial Disclosure by Private Corporations- An Economic Analysis. Prepared for the OECD International Experts Meeting on Corporate Governance of Non-listed Companies, pp. 1-24. Binh, T. Q., 2012. Voluntary Disclosure Information in the Annual Reports of Non-Financial Listed Companies: The Case of Vietnam. Journal of Applied Economics and Business Research, Vol. 2, Iss. 2, pp. 69-90. Depoers, F., 2000. A Cost Benefit Study of Voluntary Disclosure: Some Empirical Evidence from French Listed Companies. The European Accounting Review, Vol. 9, Iss. 2, pp. 245-263. Ernest & Young, 2009. Non-Financial Reporting. Non-Financial or Sustainability Reporting. [Online] Available at: http://www.ey.com/Publication/vwLUAssets/Non-financial_reporting/$FILE/Climate%20change_Non%20financial%20reporting.pdf [Accessed September 1, 2014]. 1Education Portal, 2014. Profitability Ratio: Definition, Formula, Analysis & Example. Academy. [Online] Available at: http://education-portal.com/academy/lesson/profitability-ratio-definition-formula-analysis-example.html#lesson [Accessed August 30, 2014]. 2Education Portal, 2014. Financial Statement Ratios: Determining Company Performance. Academy. [Online] Available at: http://education-portal.com/academy/lesson/financial-statement-ratios-determining-company-performance.html#lesson [Accessed August 30, 2014]. Ghosh, D. & Wu, A., 2007. 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Annual Report and Financial Statements 2009. [Online] Available at: http://www.rb.com/documentdownload.axd?documentresourceid=188 [Accessed August 30, 2014]. Reckitt Benckiser Group plc, 2010. Driving Innovative Growth. Annual Report and Financial Statements 2010. [Online] Available at: http://www.rb.com/documentdownload.axd?documentresourceid=2580 [Accessed August 30, 2014]. Reckitt Benckiser Group plc, 2011. Innovating for a Healthier Future. Annual Report and Financial Statements 2011. [Online] Available at: http://www.rb.com/documentdownload.axd?documentresourceid=22982 [Accessed August 30, 2014]. Reckitt Benckiser Group plc, 2012. Healthier Happier Stronger. Annual Report and Financial Statements 2012. [Online] Available at: http://www.rb.com/documentdownload.axd?documentresourceid=44050 [Accessed August 30, 2014]. Reckitt Benckiser Group plc, 2013. Enabling Healthier Lives. Annual Report and Financial Statements 2013. [Online] Available at: http://www.rb.com/documentdownload.axd?documentresourceid=66591 [Accessed August 30, 2014]. Reckitt Benckiser Group plc, 2014. RB History. RB Worldwide. [Online] Available at: http://www.rb.com/rb-worldwide/rb-history [Accessed August 30, 2014]. Ronena J. & Yaarib, V., 2002. Incentives for Voluntary Disclosure. Journal of Financial Market, Vol. 5, pp. 349-390. TD Bank, 2014. Analyzing Your Financial Ratios. Overview. [Online] Available at: http://www.tdbank.com/small_business/workshops/ratios/textratio_analysis.htm [Accessed August 30, 2014]. The Auditing Practices Board, 2009. The Auditor’s Report on Financial Statements. International Standard on Auditing, pp. 1-36. William Hill Plc, 2009. Transforming a Trusted Brand. Annual Report and Accounts 2009. [Online] Available at: http://files.investis.com/wmh/investors/reports/2009rep/ar2009/ar2009.pdf [Accessed August 30, 2014]. William Hill Plc, 2010. Transforming Innovating Performing. Annual Report and Accounts 2010. [Online] Available at: http://files.investis.com/wmh/documents/ar_2010a.pdf [Accessed August 30, 2014]. William Hill Plc, 2011. Statement of Directors’ Responsibilities. Annual Report and Accounts 2011, pp. 1-114. William Hill Plc, 2012. The Home of Betting. Annual Report and Accounts 2012. [Online] Available at: http://www.williamhillplc.com/~/media/Files/W/William-Hill/ar/ar_2012.pdf [Accessed August 30, 2014]. William Hill Plc, 2013. The Home of Betting. Annual Report and Accounts 2013. [Online] Available at: http://williamhillplc.com/~/media/Files/W/William-Hill/ar/ar_2013_v1.pdf [Accessed August 30, 2014]. 1William Hill, 2014. Customers. Corporate Responsibility. [Online] Available at: http://www.williamhillplc.com/corporate-responsibility/customers.aspx [Accessed August 30, 2014]. 2William Hill, 2014. Shops. About William Hill. [Online] Available at: http://www.williamhillplc.com/about-william-hill/shops.aspx [Accessed August 30, 2014]. Yahoo! Inc, 2014. William Hill PLC (WMH.L). Home. [Online] Available at: https://uk.finance.yahoo.com/echarts?s=WMH.L#symbol=WMH.L%253brange=1d [Accessed September 6, 2014]. Appendices 1. Profitability Ratio Gross Profit Ratio & Asset Turnover Ratio Gross Profit Ratio = Gross Profit / Net Sales (Melville, 2014; Greuning & et. al., 2011) Asset Turnover Ratio = Sales or Revenues/Total Assets (Source: 1Education Portal, 2014) William Hill Plc Figure 1: Profitability Ratios of William Hill Plc Source: (William Hill Plc, 2009; William Hill Plc, 2010; William Hill Plc, 2011; William Hill Plc, 2012; William Hill Plc, 2013) Reckitt Benckiser Group Plc Figure 2: Profitability Ratios of Reckitt Benckiser Group Plc Source: (Reckitt Benckiser Group plc, 2009; Reckitt Benckiser Group plc, 2010, Reckitt Benckiser Group plc, 2011; Reckitt Benckiser Group plc, 2012; Reckitt Benckiser Group plc, 2013) 2. Financial Management Ratios Current Ratio and Liquid Ratio Current Ratio = Current Asset / Current Liability Liquid Ratio = (Current Assets - Inventory) / Current Liabilities (Source: 2Education Portal, 2014) William Hill Plc Figure 3: Financial Management Ratios of William Hill Plc Source: (William Hill Plc, 2009; William Hill Plc, 2010; William Hill Plc, 2011; William Hill Plc, 2012; William Hill Plc, 2013) Reckitt Benckiser Group Plc Figure 4: Financial Management Ratios of Reckitt Benckiser Group Plc Source: (Reckitt Benckiser, 2009; Reckitt Benckiser, 2010, Reckitt Benckiser, 2011; Reckitt Benckiser, 2012; Reckitt Benckiser, 2013) 3. Gearing Ratio Debt-to-Equity Ratio = Total Liabilities/ Total shareholder's Equity Equity ratio = Equity/Asset (Source: Peterson-Drake, 2011) William Hill Plc Figure 5: Gearing Ratios of William Hill Plc Source: (William Hill Plc, 2009; William Hill Plc, 2010; William Hill Plc, 2011; William Hill Plc, 2012; William Hill Plc, 2013) Reckitt Benckiser Group Plc Figure 6: Gearing Ratios of Reckitt Benckiser Group Plc Source: (Reckitt Benckiser, 2009; Reckitt Benckiser, 2010, Reckitt Benckiser, 2011; Reckitt Benckiser, 2012; Reckitt Benckiser, 2013) 4. Investment Ratio Price Earnings Ratio = Market Price per Share/Earnings per Share Dividend per Share = Total Dividend Paid/Number of Ordinary Shares (Source: Peterson-Drake, 2011) William Hill Plc Price Earnings Ratio Dividend Per Share Figure 7: Investment Ratios of William Hill Plc Source: (William Hill Plc, 2009; William Hill Plc, 2010; William Hill Plc, 2011; William Hill Plc, 2012; William Hill Plc, 2013) Reckitt Benckiser Group Plc Price Earnings Ratio Dividend per Share Figure 8: Investment Ratios of Reckitt Benckiser Group Plc Source: (Reckitt Benckiser, 2009; Reckitt Benckiser, 2010, Reckitt Benckiser, 2011; Reckitt Benckiser, 2012; Reckitt Benckiser, 2013) Read More