Key Performance Indicators - Essay Example

Key Performance Indicators        Section 417 (6) of the Companies Act, 2006 says that, the business review of a company is to some extent essential for an understanding of the position or growth of the organization’s business. The review should consist of- a. examination of company using monetary key performance indicators, and b. Where suitable, examination using other key performance indicators consisting of information related to environmental subjects and worker matters. Key performance indicators means aspects by reference to which growth routine or position of the organization’s business can be considered efficiently. Below is a report consists of Key Performance of ten companies listed on the London Stock Exchange from retail market.  • A table illustrating the Key Performance Indicators used by the ten companies Serial no. Name of the company. Key Performance Indicators(FS) 1 HOME RETAIL Sales measured up to budget, Sales per Square Foot, Wage expenses,  Average Sale per consumer, unit hour, time spent etc. 2 INCHCAPE Sales, trading earning, profit before after tax, working capital, trading margin etc. 3 JD SPORTS Total revenue increased, Expenditure on acquisitions and associated asset purchases 4 KESA ELECT. More focus on staff training, waste recycling, Selling of A-rated products 5 KINGFISHER Operating margins, trade sales, Sales, profit loss and gain. 6 MARKS & SP. Operating profit, total operating profit, profit after taxation. 7 MOTHERCARE Good initial sales, conversion rates, strong balance sheet 8 NEXT Good sales, retail sale, showroom selling and prices. 9 SPORTS DIRECT High retail growth, Group gross margin, Brand licensing 10 WH SMITH Sales management, Whole sales, Supply chain A discussion of the similarities and differences of the Key Performance Indicators used by the ten companies and an assessment of their suitability for understanding the development, performance or position of the companies below: Ten companies are selected from London stock exchange that all included in General industrial sector.        Argos is one of the leading home based retailing companies in UK. They have 70 years market heritage in UK and Ireland. The company provides a successful unique offer of choice and keeps value to the customer’s need. Customers got chance to network purchase by 750 store located in UK. Per year 130 million customers got services and 6 millions ordered by online and phone. The important factors that help to move forward to the company are Differentiated and market leading formats, Leveraging scale and infrastructure, Product ranges and related services, Delivering value to the customer, Efficient cost base and financial strength etc.        ‘JD Sports’ is another retail company running in UK. From 1981, in Oxford Street, the company started their business and clothing, footwear, sports items and accessories are the main products. The company earns more than £ 769.8 million in 2010 financial year. Kesa electronic company sells electronic items. “The principal products sold by the group are categorized as white, brown and grey electrical goods and related accessories. White goods comprise large and small sized domestic appliances, such as refrigerators, washing machines, microwaves, coffee machines and irons” (Products and Services 2011, para. 1). Gray goods are included telecommunications and multimedia products like mobile phone, Computers, digital cameras scanner, printer etc. Brown goods means all vision and audio products like DVD players, flat-screen televisions, MP3 players and camcorders. The company “is ideally placed to offer associated services such as home delivery and installation, credit and extended warranties. In addition, the development of digital convergence has provided us with the opportunity to offer a range of ‘paid for’ services” (Products and Services 2011, para. 5). The company’s group revenue was increased to 7.6% that up to €2567 million. The company effectively approached with corporate social responsibility that pursues growth and brand development.        Kingfisher plc is a leading home improvement retailing company in UK. It is having 900 stores in eight countries. The main brands are B&Q, Brico depot, Castorama, Screwfix. The company is having 80000 employees. The key performance indicators is Driving up B&Q UK & Irelands profit, Exploiting our “UK trade opportunity,    Expanding our total French business, Rolling out in Eastern Europe, Turning around B&Q China, Growing Group sourcing, Reducing working capital, Engaging our people” (Cheshire 2011) and Minimizing the impact on the environment.        Marks and Spencer corporate are having a wide product range in market. All products will inspire new customers to buy it. “Mother care is a specialist retailer of products for mothers-to-be, babies and children up to the age of eight. Mother care offers a wide range of maternity and childrens clothing, furniture and home furnishings, bedding, feeding, bathing, travel equipment and toys through its retail and internet operations in the United Kingdom, and also operates internationally through retail franchises in Europe, the Middle East, Africa” (Our Brands: Mothercare 2008) etc. Main brands are mother care, early learning center and gurgle.com etc.        Next plc is a UK based retailing company offering exciting and excellent quality fashion, beautiful designing and accessories for all type people. Next is having 500 retailing stores in UK and Eire. Company is following CSR programs too. Sports direct is one of the leading sports retailers in UK. They provide sports and leisure items, footwear, clothing, and accessories.        Inchcape group is offering marine service, cargo service etc. The CSR policy of the group mostly related to the ethical behavior. WH Smith plc is leading UK based retailing company following two business cores like travel and high street. Travel stores have wide range of product to sell on moving. There are 561 travel units running successfully in railway station, airport and motorways areas. High street operates 612 stores running near to all high streets in UK. They sell stationary, books, news and impulses. They reach to customers online also. More than 17000 staffs are working with them. These all companies are following corporate responsibility policies and programs.        While analyzing the companies, some odds are also seen. That WH Smith plc is having two types of business strategy compare to other companies. Those are high street and travel stores. Inchcape is engaged with another type of business that is marine services, cargo services and government services etc. While considering Next, they try to develop commitment to the sourcing of raw materials, they also start to work with some of their suppliers to understood and get visibility of the all supply chain across all product categories. JD Sports is having stations in Belgium, Holland, France, Slovania and other more countries. Kingfisher is having 50% joint venture businesses with KOC group, Turkey as well as strategic alliance with Hornbach, Germany. An evaluation of the quality of the Key performance Indicators in terms of both the ASB Reporting Statement. ASB Reporting Statement including various financial data about a company. The necessary financial statements are income statement, balance sheet, and statement of alterations in financial position. They may be joined with a supplementary statement to describe the financial position or performance of the company. Financial statements of the organizations are written report of business finances, consisting of profit and loss statements and balance sheets. They stand as one of the most crucial elements of business data, and as the principal way of communicating monetary information on the subject of an entity to exterior parties. Financial statements are a summation of the fiscal place of an organization and the general function and also financial statements are planned to meet the requirements of many diverse clients, mainly current and potential creditors and owners. A key performance indicator denotes factors by position to which the growth, presentation or situation of the companys business can be calculated successfully. “A KPI has a target or ranges, or both, to measure the improvement or deterioration in the performance of an activity critical to the business. KPIs differ depending on the business. For example, in a call center, the timely answering of customer calls is a key business activity. A KPI could be the ‘Average time for response to a customer call’, with a target of ‘less than one minute’” (Key Performance Indicators (KPIs) n.d.). The function of key performance indicators is to give assessable indicators to the decision makers in the organization for computing the managerial performance and for measuring the attainment of organizational purposes. KPI’s are the implement for internal business analysis and for calculating the strategy result. This key performance indicator includes financial statement analysis. Financial statement analysis mainly includes profitability ratios, liquidity ratios. The ASB believes that its Reporting Statement on the OFR contains every of the latest Act 2006 requirements and that this report carry on to give appropriate direction for UK companies. With the intention of offering further help to UK companies, the press notice also contains a table which demonstrates the link among legislative requirement and best practice guidance. According to the Financial ASB, financial reporting insists of not only financial reports but also other way of communicating monetary data regarding an enterprise to its exterior users. Financial statements offer information helpful in investment and credit judgments and in evaluating cash flow prospects. They offer data on the subject of organizations resources, claims to those resources, and alterations in the resources. Reporting Statement:  The Reporting Statement Includes: The requirement of an amount of values for directors to be relevant when arranging an OFR; and the condition of suggested key fundamentals of a disclosure structure to apply in an OFR. The values in specific make clear that the OFR must return the directors vision of the business. The goal is to help members of the company to measure the plans adopted by the unit and the possible for those plans to succeed. Whereas the OFR must concentrate on matters that are applicable to members, the data in the review will also be helpful to other users.  The Reporting statement sets out a structure of the main essentials that must be revealed in an OFR, leaving it to directors to think about how best to format their evaluation, in the light of the particular conditions of the entity. It includes suggestions on the revelations that must be made in admiration of any Important Performance Indicators (KPIs) included in an OFR, except it does not identify any specific KPIs that units must reveal, nor how lots of, on the foundation that this is a subject for directors to create a decision. Reference List Cheshire, I. 2011. Delivering Value. Kingfisher. [Online] Available at [Accessed 12 Dec. 2011]. Key Performance Indicators (KPIs). n.d. IBM. [Online] Available at [Accessed 12 Dec. 2011]. Our Brands: Mothercare. 2008. Mothercare Plc. [Online] Available at [Accessed 12 Dec. 2011]. Products and Services. 2011. KESA Electricals. [Online] Available at [Accessed 12 Dec. 2011]. Read More