FINANCIAL ANALYSIS OF WHITEBREAD PLC

Financial Analysis of Whitebread Plc



Financial Analysis of Whitebread Plc

a) Executive Summary

Whitbread PLC, the UK's biggest inn and bistro assembly, today broadcast in its 2010 yearly report that several its inns and bistros will be utilized to endow a assistance of over £100m to the company's retirement benefit fund.

Whitbread is the newest FTSE 100 Company this month, next Marks and Spencer and Sainsbury's, to broadcast this new set about to funding retirement benefit designs that was evolved by Deloitte1. It has furthermore lately been taken up by ITV and John Lewis. The blended worth of these transactions is £1.2 billion.

Using Deloitte's set about, Whitbread has formed a joint project with the retirement benefit design trustee that is endorsed by a stake in the company's inn and bistro portfolio. Whitbread will extend to command the properties while the joint project presents earnings to the retirement benefit scheme.

The UK Restaurants Market Development Report emphasized how the next five years will glimpse the worth of the bistro commerce boost to £5449 million. Estimations display that 2010 will glimpse the bistro market augment by a unassuming 1%. But numbers from Market and Business Development (MBD) display that the present position is extending to decline.

In 2008 the general bistro market dropped by 3% to £5373 million and the expanded financial doubt put force on bistro revenue, especially in the second half of the year. Value sales inside the customary bistros part turned down by 2% to £949 million but the report supplemented that the significance of dining out had increased by 1% since 2004 mostly due to celebrity chefs, expanded newspapers vigilance and a renewal of British cooking.

The report supplemented that bistros are opposite expanding affray from the tavern part as it turns its vigilance to nourishment sales.  Supermarkets and their 'restaurant style' repasts packages are furthermore intimidating the bistro commerce as more buyers opt to stay in.

b) Detailed Evaluation of the Areas

i) Short Term Liquidity

Short term Liquidity

Current Ratio

2010

2009

2008

2007

0.246776

0.193587

1.663614

5.420798

Working Capital Ratio

2010

2009

2008

2007

-514000

-533200

456500

1738700

The Current Ratio expresses the relationship between the firm's current assets and its current liabilities.

Current assets normally include cash, marketable securities, accounts receivable and inventories. Current liabilities consist of accounts payable, short term notes payable, short-term loans, current maturities of long term debt, accrued income taxes and other accrued expenses (wages).

From the calculated results its being seen that the company has more current assets to pay off its current liabilities, but if we compare the results of both financial years it's being observed that the company is in the decreasing trend But still the company has enough current assets to pay off its liabilities.

The liquidity of the company has decreased in 2010 as compared to 2010. Current assets has increased over the year across all factors and showed a steady growth. Current liabilities saw the short term borrowings increase by multifold thus pulling the current ratio down to 0.52. Whitebread Plc must make sure its current ratio should be as close to two as possible to keep an ideal balance ...