Analyzing the Profitability of Two Competing Firms in the UK - Case Study Example

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Firms usually employ different strategies to remain competitive in their industry thus continue to remain profitable for the rest of their business operations…

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Analyzing the Profitability of Two Competing Firms in the UK

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Subject: Finance & Accounting
Type: Case Study
Level: Undergraduate
Pages: 21 (5250 words)
Downloads: 0
Author: lacy76

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The paper "Analyzing the Profitability of Two Competing Firms in the UK " is a perfect example of a finance and accounting case study. Competition is healthy for any firms to ensure that quality products and services are given to the customers. Firms usually employ different strategies to remain competitive in their industry thus continue to remain profitable for the rest of their business operations. Profitability is the only mean of ascertaining how competitive a firm is in the industry.

Moreover, it helps create a clear picture of how two firms with similar industry domination operate to keep their profit high at all time. This paper seeks to analyze the profitability of two firms in the context of their sector operations with regard to other there firms in the profitability portfolio. In doing this, the paper will use an example of two firms listed in the UK and compare the use of financial statements from Thomson's database to study the profitability of the two firms in relation to the other three firms in a portfolio industry.

Additionally, the paper will reformulate the financial statements before analyzing the reformulated financial statements ratios. Later, the paper will analyze profitability, common size, and trend analysis. Finally, the paper will interpret the results and give a conclusion on the profitability of the two firms.1.0 IntroductionComparison of two companies is only possible through analysis of their profitability and performance. The main tool for ascertaining the profitability ratio between any two firms is conducting a comparison of the financial ratios and other asset ratios in a decomposition approach.

This will provide a clear insight into the kind of competition that exists between the two companies and later give an opinion on the closeness of their profitability.it is possible to compare two firms within the same industry for the same trading period.The retail firms in the retail industry face a lot of competition from other industry player leading to increasing rivalry to control the market. The general characteristic of the retail industry is a free market where players can enter and leave freely.

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