The paper 'Financial Statement for Investors' is a perfect example of a Finance and Accounting Assignment. The Next multinational company history can be traced back to 1864 when Joseph Hepworth started J Hepworth & Son a tailoring company in Leeds. The company started off as making ready to wear suits until its acquisition of Kendall a sons that expanded its outlets in British in 1981. It was this acquisition that states the first line of chains of NEXT (Next Plc). The chains later expanded to womenswear in 1982, concentrating on the sale of clothes, shoes and accessories, and menswear in 1984 with the renaming of the company to NEXT in 1986.
A year later, the company began the children's wear chains. The company has changed its brand several times and expounds its products and services to the Wedding list service (Next Plc. our History). Presently, the company has expanded into other lines of business and other regions. The main business for NEXT is the sale of clothes both in house designed and outsources through their channels: NEXT Retail chain within the United Kingdom and Eire; Next International, outlet chains outside the UK; Next directory where the company sells their products online.
Moreover, the company engages in the sale of third party goods through its NEXT Sourcing channel. Among the subscribe brands is Lipsy. These operations extend beyond the borders of the UK to include 200 stores in 40 other countries (NEXT Plc Business Overview). Their line of products includes clothing, home products, accessories, and footwear as well (Annual Report 2016). However, the main headquarters for the company’ s operations are in Enderby, Leicester.
The company is a member of the London Stock exchange and has been trading since 1948 in the main market and the category Premium Equity Commercial Companies (London Stock Exchange). The financial statements of the company are prepared in accordance with the international financial reporting standards and as per the requirements of the Company Act 2006. The consolidated annual reports are the company’ s operations for the financial year ending in each calendar year. The reports are therefore audited by Ernst and Young. The annual reports for the 53 weeks ending on 30th January 2016 show that the total sales for the group increase by 3% while the EBIT rose by more than 5% from the previous year.
The company declared a final dividend of 105p on the ordinary share for the year ended January 30th, 2016. Financial Ratio Analysis The financial ratio analysis is one of the ways of measuring the performance of a company in respect of the economic events in reference to previous performance. The performance measurement includes the liquidity aspect, the efficiency of the company, the leverage a capital structure policy of the company, the profitability, and the investor capability of the company.
The ratio analysis will be in comparison with the performance of Marks and Spencer Group's financial performance in the same year. Liquidity The liquidity of a company is measured using the current ratio and the acid test ratio. The current ratio for NEXT stands at 1.4 for the year 2016, an improvement of o. 4 from the previous year. This means that NEXT Company can only be able to fulfill its current obligations 1.4 times within the year; out differently, the current assets of the company are 1.4 times the current liabilities of the company in the same period.
A better measure of liquidity, the acid test ratio reveals that NEXT can cover its current obligations 0.9 times in a year. On the other hand, Mark and Spencer (M& K) have a current ratio of 0.69 and an acid test ratio of 0.31. On both measurements, NEXT appears to have a greater ability to pay its current obligations than does M& K. the Investor Chronicles Financials (2016) reported a current ratio of 1.66 a quick ratio of 1.20 for NEXT for the 2015/2016 period.
Annual report and accounts Next January 2016 Next Plc
Farrell S September 2016 Next Retail profits slide as consumers shun full price clothes The Guardian [online] available from: https://www.theguardian.com/business/2016/sep/15/next-retail-profits-slide-as-consumers-shun-full-price-clothes accessed 30/11/2016
Investor Chronicles Financials Next Plc [online] available from: markets.investorchronicle.co.uk/research//Markets/Companies/Financials?s=NXT:LSE accessed 30/11/2016
Investor Chronicles Next Plc Summary [online] available from: markets.investorschronicles.co.uk/research/Markets/Companies/Summary?s=NXT:LSE accessed 30/11/2016
Next Plc Our History [online] available from: www.nextplc.co.uk/about-next/our-history accessed 30/11/2016
Next Plc Business Overview [online] available from: www.nextplc.co.uk/about-next/at-a-glance# accessed 30/11/2016
Monaghan A November 2016 Next cuts sales forecast after tough third quarter The Guardian [online] available from: https://www.theguardian.com/business/2016/nov/02/next-cuts-sales-forecast-after-tough-third-quater accessed 30/11/2016
The Motley Fool November 2016 the bear case for Next plc [online] available from: mponey.aol.co.uk/2016/11/02/the-bear-case-for-next-plc/ accessed 30/11/2016
Woo Zoe September 2016 Weather uncertainty is freezing high-street fashion’s fortunes the Guardian [Online] available from: https://www.theguardian.com/business/2016/sep/24/weather-uncertainity-freeze-high-sreet-fashion-fortunes accessed 30/11/2016