Financial Statement

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Financial Statement


Financial ratios, derived from accounting, are essential tools for fundamental analysis. These enable to evaluate the past performance of a company and management to estimate the size of the debt and to better understand the business in various other factors. (Guilding, 2002, pp 64 - 87)

The interpretation of data is extremely important financial for each of the activities performed within the company , through the managers they use to create different policies for financing external as well as they can focus on solving problems specific afflicting the company as are the accounts receivable and accounts payable; molded at the same time the policies of credit to the customers depending on their rotation, can also be a focal point when used as a tool for rotation of inventory obsolescence. Through the interpretation of the data presented in the financial statements managers, customers, employees and suppliers of financing can account for the performance that the company shows in the market, is taken as one of the primary tools of the company. (Medlik & Ingram, 2000, pp 137 - 141)

Financial Ratios

Tottenham Hotspur plc is engaged in the operation of a professional football club in England together with the related commercial activities. Company also acquires numerous properties with a view to a new stadium development.

A detailed financial analysis of the Tottenham Hotspur Plc is provided here onwards, which encompasses various aspects of financial information. Financial ratio analysis will cover the profitability, efficiency, liquidity and the leverage of the organization. (Guilding, 2002, pp 64 - 87)

Profitability Ratios

Profitability ratios explain the performance of an organization in terms of the profit it earns.

Return on Capital Employed = -24.36 %

Gross profit margin = 45.8 %

Operating Expense = 102 %

Net profit margin = -13.98 %

Fixed Asset Turnover = 41.5 %

Short-term Liquidity Ratios

Liquidity ratios enable the organizational management to analyze their position to meet the day-to-day requirements of the organization and to pay off its short-term debts. (Medlik & Ingram, 2000, pp 137 - 141)

Current Ratio = 0.44 : 1

Acid Test Ratio = 0.43 : 1

Working Capital Ratios

Working Capital Ratios provide valuable information regarding the state of the running finance. They are related to liquidity ratios but tend to focus more on the days within which payments are disbursed and received. (Medlik & Ingram, 2000, pp 137 - 141)

Debtor Days= 106 days

Inventory Days = 55 days

Creditors Days = 69 days

Long-term Solvency

Long-term Solvency, also termed as leverage, portrays the organizational financing policies. It reflects the way an organization raises funds for investments and other organizational purposes. (Guilding, 2009, pp 74 - 79)

Gearing Ratio = 111.48 %

Interest Coverage Ratio= -2.45 times

Financial Analysis and Interpretation

In attempting to analyze financial statements through the use of financial ratios organizations should have the expertise to interpret them in order to bring about positive changing in the organizational performances. The paragraphs here onwards interpret the ratios to extract meaningful information for decision-making process. (Guilding, 2002, pp 64 - 87)

Profitability Ratios

Tottenham Hotspur Plc's Return on Capital Employed (ROCE) is portraying an extremely alarming ...
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