Financial ratios analysis - Essay Example

The 1990s were a pretty significant time period for the company; it was in 1998 that the company became the first British one to make a pre-tax profit of a billion pounds. In the later years, the company did plunge into a crisis but has recovered lately. (Marks & Spencer, 2010) The company is listed on the London Stock Exchange and its stock price as of 10th December 2010 was 378 GBP, at closing. (Bloomberg, 2010) The company’s clear strategy in the past few years has been to focus on the United Kingdom market, as made clear by the various press releases and the excerpts of the Annual General meeting minutes.

The company was famous for its British fundamentals and they are tapping on their differentiation point again. Value realization and closure of loss-making business was also a part of the business strategy in the new millennium. Improving the capital structure was another part of the strategy (Press Release, 2001). The current financial year has been pretty good for the company, according to the chairman. The clothing market share of the company increased to 11% from 10.7%, where food has seen a 6th consecutive year of growth.

Unadjusted profits have been up to £713.4 million, which is a 17.5% increase from 2009. The current ratio appraises the liquidity position of the company and provides the necessary safety net for the creditors. Marks & Spencer has improved its liquidity position in the recent years but still lags behind as compared to industry average. (Bloomberg, 2010) the company has 80p for every £1 of its short term obligations in 2010 as compared to 60p in 2009. The acid test is stronger measure of the solvency of the company.

It removes the less liquid assets for a better comparison. Marks & Spencer has improved as compared to the last year. The company has 50p for every £1 of short term liabilities.