Managing Operations and Finance - Essay Example

Moving forward, the paper presents a comparison of the current and last year financial performance of the company through financial statement ratio analysis. The primary reason to conduct a ratio analysis is to quantify the results of the operations of a company and compare them with that of the prior year(s) in order to assess different aspects of the financial feasibility. The ratios are divided into profitability, liquidity and gearing ratios. The paper identifies the areas, through ratio analysis, where the company is performing well and where it needs improvements.

In conclusion the paper presents a comparison of the financial and operational performance of Marks and Spencer with one of its primary competitors, Debenhams. Major financial ratios are compared and in addition, historical share prices are also analyzed of both companies in order to identify which company has a better market capitalization and better reputation from investor’s perspective. Operating Performance of the Company Marks and Spencer, an internationally recognized name considered analogous for high fashion and trend setting quality.

Marks and Spencer is regarded as the premier retailer in the United Kingdom catering more than 21 million customers. Keeping in pace with the globalization, the company is planning to expand its business in other frontiers. As per the audited financial statement of the company for the financial year 2010, the company employees more than 76,000 and has its operations expanded to more than 41 countries in the world. Marks and Spencer’s well established business attracts a great deal of consumer base irrespective of demography.

The primary business of the company comprises of selling general merchandise which mainly consists of womenswear, menswear and an expanding kid’s wear. The company, through its resilient and effective marketing tactics, has able to capture market share of around 11.0% by value and 11.2% by volume. Another source from where the company earns a great deal of its revenue is through selling food items. Marks and Spencer is the leading provider when it comes to selling fine quality food. The company sells everything from fresh meals to canned food items, highly acclaimed and praised range of wines to other groceries products.

The company has improved its shelf availability and has adopted the strategy of renewing its food range. The proactive approach has resulted in an increase of 1.8% in sales revenue from food business. The financial year 2010 proved to be another progressive year for Marks and Spencer. During the current year, Marks and Spencer’s revenue increased by 5.2% during the current year to an impressive ?9.5 billion which has caused the operating profit to increase by 9.8%. The company, following its growth strategy, aspires transform its operation into multi channel business.

The company has taken major steps in investing its direct sales business which enhanced the revenue by 27% during the current financial year. In addition, the company is actively following its strategy of refurbishing its stores and giving them a new and improved look. The refurbishment has resulted in an increased storage space and has created a fashionable shopping environment. The following table compares the financial results of Marks and Spencer, for