Financial Information for Business Decisions - Essay Example

Marks and Spencer’s well established business attracts a great deal of consumer base irrespective of demography. The company’s main business consists in selling fabric items and clothing for men, women and kids’. The company, by applying prudent marketing techniques, has been able to grab market share of around 11.0%2 by value and 11.2%3 by volume. Marks and Spencer has also been actively involved in the business of marketing and selling edible products which has earned the company immense revenue in the past few years.

Through its unmatchable food quality, Marks and Spencer is now regarded as one of the finest when it comes to quality food products. Operating Performance of the Company Marks and Spencer has been actively involved in the marketing of fresh meals and canned food items. The company also earns a good portion of its revenue through selling some of the finest wines and other affordable grocery products as well. In the recent past the company has been able to renew its food range and now offers a diverse variety of products to its customers.

This change in strategy has been of benefit to the company which has caused an increase of 1.8%4 in sales revenue from food business. During the financial year 2010, the company progressed by leaps and bounds. . The table below compares the financial results of Marks and Spencer, for the last five financial years from 2010 till 2006. Particulars8 2010 2009 2008 2007 2006 Group Revenue 9,537 9,062 9,022 8,588 7,797 Operating Profit - Continuing Operations 852 871 1,211 1,046 850 Profit from ordinary activities before taxation - continuing operations 703 706 1,129 937 746 Profit for the year 523 507 821 660 523 As can be observed from the above analysis, the financial outlook of the company has improved in the last five years.

The group revenue has shown an inclining trend which pertains to the opening of new stores and outlets of the company. The company has expanded its operation both in and out of England over the past couple of years. Marks and Spencer is actively involved in overseas sales, and fluctuation in exchange rate has had a significant impact on the revenue of the company. The company was able to shrug off the recent global meltdown .The gross profit to sales ratio for the year ended December 31, 2010 was 8.

93%9 which has decreased by 0.67% during the current year. Despite the decrease in gross profit to sales ratio, the net profit of the company has increased by ?16.210 million. The primary reason behind the increase in the net profit is the fact that during the current financial year the company did not incur any cost during the current year on corporate restructuring. The increase in net profit is due to the fact that during the current year the company did not incur any exceptional cost which it had incurred during the year prior to that on strategic restructuring.

If we analyze the financial year 2009, there has been a major decrease in the profit after tax. This