The different objectives of WH Smiths - Free Essay Example

Sample details Pages: 6 Words: 1858 Downloads: 5 Date added: 2017/06/26 Category Finance Essay Type Research paper Did you like this example? Different company have different objective, The WH Smith Company have different objective. This company main objective is to pick up his customer offer and grow the business by renewing existing contact and developing new formats and channels. WH Smith company business focusing things are travel sells a tailored range of Newspaper, Magazines, Books, and impulse products for people on the move and a broader convenience range in hospitals. Don’t waste time! Our writers will create an original "The different objectives of WH Smiths" essay for you Create order The WH Smith Company one of the UKs leading retailers, is made up of two core business presence. The company one of the United Kingdom top retail organisation, is made up two core business which are below (figure no 1) travel business and high street business. Figure: 1 Travel business mainly focusing sells a tailored selection of newspaper; magazines, books, and others fancy products in airports, workplace, motorway service area hospitals, and train station bus station. The High Street sells a wide range of books, stationery, and newspaper and convenience offer of entertainment product according to the customer desire. The WH Smith services are depend on always customer choice on the high street and they are trust convenience retailer for customers at travel locations. Nowadays they have extensive store portfolio operating from 490 travel units and 565 high streets. The WH Smith Companys financial report according to the report base on 2009 the group goes into the year ahea d well-positioned and they are showing us focus on the continued successful execution of them strategic plans. In this year the group argue continued to deliver good performance in the face of challenging economic condition. The company objective was trading environment and reflects the consistent and focused execution of company goal to grow travel business and to build on High Streets positions as Britains most popular stationery, bookseller and newsagent. According to the financial report company continues to have a strong balance sheet and remains highly cash generative. The WH Smith retail group having profitability and cash generation remain priorities in both the travel and high street business. Whsmith directors are responsible for the management of the business of the Company and may exercise all the powers of the Company subject to applicable legislation and regulation, the Companys Memorandum and Articles of Association. The consolidated Group financial statements h ave been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. These are the standards, subsequent amendments and related interpretations issued and adopted by the International Accounting Standards Board (IASB) that have been endorsed by the European Union at the year end. The consolidated Group financial statements have also been prepared in accordance with IFRS adopted for use in the European Union and therefore comply with Article 4 of the EU IAS Regulation. The consolidated financial statements have been prepared on a going concern basis and Business Review. The financial statements are drawn up on the historical cost basis of accounting. The financial information is rounded to the nearest million, except where otherwise indicated. The directors are required by the IAS Regulation to prepare the Group financial statements under International Financial Reporting Standards (IFRSs) as adopted by the European Union. The Group financial statements are also required by law to be properly prepared in accordance with the Companies Act 2006 and Article 4 of the IAS Regulation. International Accounting Standard 1 requires that IFRS financial statements present fairly for each financial year the Companys financial position, financial performance and cash flows. This requires the faithful representation of the effects of transactions, other events and conditions in accordance with the definitions and recognition criteria for assets, liabilities, income and expenses set out in the International Accounting Standards Boards Framework for the preparation and presentation of financial statements. In virtually all circumstances, a fair presentation will be achieved by compliance with all applicable IFRSs. However, directors are also required to properly select and apply accounting policies, present information, including a ccounting policies, in a manner that provides relevant, reliable, comparable and understandable information; and provide additional disclosures when compliance with the specific requirements in IFRSs is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entitys financial position and financial performance. The directors have elected to prepare the parent company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). The parent company financials statements are required by law to give a true and fair view of the state of affairs of the Company. In preparing these financial statements, the directors are required select suitable accounting policies and then apply them consistently; make judgements and estimates that are reasonable and prudent; state whether applicable UK Accounting Standards have been followed, su bject to any material departures disclosed and explained in the financial statements; and prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business. The directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the parent company financial statements comply with the companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities, as described more fully in the Corporate Governance Report . The directors confirm that the above requirements have been complied with in the financial statements. The directors confirm that, to the best of their knowledge: the financial statements, prepared in accordance with the relevant financial reporting framew ork, give a true and fair view of the assets, liabilities, financial position and profit or loss of the company and the undertakings included in the consolidation taken as a whole; and the management report contained in this report includes a fair review of the development and performance of the business and the position of the Company and the Group taken as a whole, together with a description of the principal risks and uncertainties that Annual Report,(2009) Annual Report of WH Smith Retrieved on 10 March ,2010 from www.whsmith.co.uk WH Smith , (2010) Official Website Net Profit Margin = Net profit/Turnover * 100 Year 2009 ( £M) Year 2008 ( £M) = 63/1340*100 = 4.7% = 59/1352*100 = 4.4% Return on capital Employed = Profit for the year/Equity share holders fund * 100 Year 2009 ( £M) Year 2008 ( £M) = 63/35*100 = 180 = 59/35*100 = 168.57 Return on capital Employed = Profit for the year/Equity share holders fund * 100 Year 2009 ( £M) Year 2008 ( £M) = 63/35*100 = 180 = 59/35*100 = 168.57 Efficiency Ratio- Efficiency ratios are the financial statement ratios that measure how effectively a business uses and controls its assets. Debtor Collection Period = Debt Collection Period ratio, is the years sales which were outstanding at the balance sheet date, express in days. A rough measure of the days of credit that a firms offers to its suppliers/clients. The formula is as follows. (FT Prentice Hall, 2003) Debtor Collection Period = Average Debtors / Credit Sales * 365 Year 2009 ( £M) Year 2008 ( £M) = 61/1340*365 = 16.61 days = 66/1352*365 = 17.81 days Creditor payment period-This ratio is similar to the  debtors turnover ratio. It compares  creditors  with the total  credit purchases. It signifies the credit period enjoyed by the firm in paying  creditors.  Accounts payable  include both sundry cr editors  and bills payable. Same as  debtors turnover ratio,  creditors  turnover ratio  can be calculated in two forms,  creditors  turnover ratio and average payment period. Formula for Creditor payment period ratio = Average creditors/credit purchases*365 Year 2009 ( £M) Year 2008 ( £M) = 240.5/689*365 = 127.4days = 239/867*365 = 100.61 days Gearing Ratio A term describing a financial ratio that compares some form of owners equity (or capital) to borrowed funds. Gearing is a measure of financial leverage, demonstrating the degree to which a firms activities are funded by owners funds versus creditors funds. Among gearing ratios I want to present 2 Ratios Formula for Gearing = LONG TERM LIABILITES/ EQUITY SHAREHOLDERS FUND Year 2009 ( £M) Year 2008 ( £M) = 25/35 = 0.71 = 24/35 = 0.69 Interest cover- calculation of a companys  ability  to meet its  interest payments  on  outstanding debt.  Interest coverage  ratio is equal to  earnings before interest and taxes  for a time period, often one year, divided by  interest expenses  for the same time period. The lower the interest  coverage ratio, the lar ger the  debt  burden  is on the  company.  Also called  interest  coverage. Formula of Interest cover = Net profit before Interest/ Interest paid Year 2009 ( £M) Year 2008 ( £M) = 84 / 2 = 42 times = 79 / 3 = 26 times Liquidity Ratio Liquid ratio  is also termed as Liquidity  Ratio,  Acid  Test Ratio or Quick Ratio. It is the ratio of liquid assets to current  liabilities. The true  liquidity  refers to the ability of a firm to pay its short term obligations as and when they become due Acid Test = CURRENT ASSETS- INVENTORIES/CURRENT LIABLITIES Year 2009 ( £M) Year 2008 ( £M) = 262-151/281 = 0.39 = 241-147/303 = 0.31 Current Ratio An indication of a companys  ability  to meet  short-term debt  obligations; the higher the  ratio, the more  liquid the  company  is.  Current  ratio is equal to  current assets divided by  current liabilities. If the current  assets  of a company are more than twice the current  liabilities, then that company is generally considered to have good short  financial  strength. If current liabilities exceed current assets, then the company may have  problems meeting  its short-term obligations. Current Ratio formula is:  Year 2009 ( £M) Year 2008 ( £M) = 262/281 = 0.93 = 241/303 = 0.79 Investment Ratio- A ratio that helps to determine whether an investment in a particular entity is likely to be profitable and safe. Dividend per share The  the sum of  declared  dividend for every ordinary share issued. Dividend per share (DPS) is the total dividends paid out over an entire year (including interim dividends but not including special dividends) divided by the number of outstanding ordinary shares issued. DPS can be calculated by using the following formula: Dividend Paid to Equity share holders/Average number of issued equity shares Year 2009 ( £M) Year 2008 ( £M) = 78/155 = 0.50 = 23/167 = 0.13 Earnings per Share The portion of a companys profit allocated to each outstanding share of common stock.  Earnings per share  serve as an indicator of  a companys profitability. Formula Profit Available to equity share holders/Average no. Of issued equity shares Year 2009 ( £M) Year 2008 ( £M) = 63/155 = 0.40 = 59/167 = 0.35 In my opinion this trading environment, they depend more than ever on the commitment of them management team, staff and suppliers. They could not have achieved these results without their support. It particular thanks go to WHSmith staff in all areas of the Group, who have worked hard to deliver this set of results. The Groups commitment to corporate responsibility (CR) remains just as relevant in difficult economic times, with the CR programme contributing to our risk management and overall business efficiency. I am pleased to write of this WHSmith company report that they have continued to make progress with company CR objectives, whether improving environmental efficiency by reducing energy consumption and waste, improving the forestry standards of company own-brand timber and paper products or maintaining their support for literacy projects. The WHSmith efforts continue to be recognised in the Business in the Community CR Index, where they are proud to have been awarded the highest ranking, Platinum, for the second year running.Whilst they do not anticipate any significant changes to the economic environment in the short-term, At last they believe that group goes into the year ahead well-positioned and they remain focused on the continued successful execution of their strategic plans.