The financial statements for Clarrods plc are given below for the two years ending 30 June 2015 and 30 June 2016. Clarrods plc operates a large chain of retail stores.

Dividends paid on ordinary shares for 2015 and 2016 were £65 million and £75 million respectively.
Required:

(a) Choose and calculate eight ratios that would be helpful in assessing the performance of Clarrods plc. (Use end-of-year values and calculate ratios for both 2015 and 2016.)

(b) Using the ratios calculated in

(a) and any others you consider helpful, comment on the business’s performance from the viewpoint of a prospective purchaser of a majority of shares.

Transcribed Image Text:

Income statement for the years ending 30 June 2015 m Sales revenue Cost of sales Gross profit Wages and salaries Overheads Depreciation Operating profit Interest payable Profit before taxation Taxation Profit for the year 2,600 (1,560) 1,040 (320) (260) (150) 310 (50) 260 (105) 155 2016 m 3,500 (2,350) 1,150 (350) (200) (250) 350 (50) 300 (125) 175