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Sustainability of the Clients Investments - Assignment Example

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Sustainability of the Clients Investments

The company's broad product line is comprised of wall and floor tiles, natural stone, and laminate and solid wood flooring. Toops Tiles also offers underfloor heating, tools, adhesives, grouts, accessories, and cleaning products to complement the major product lines. These additional offerings enable each customer to finish any job involving tile installation.
Through this memo, the medium and long term sustainability of Toops Tiles PLC will be assessed through an analysis of its financial statements. I will also provide a SWOT analysis to get a deeper insight on the company's internal performance and external environment.
Table 1 shows a two-year comparative report on the Toops Tiles PLC's major accounts. During the fiscal year 2005, the company recorded total sales of 175.64 million compared to the previous years' 159.43 million. It can be noted that the company's revenue ballooned by 10% despite the weak consumer environment in the United Kingdom. Profit before taxes also leaped by 16% to 39, 232 and net income totaled 30, 189. Toops Tiles' resources also expanded by almost 3% which is due to the growth in tangible fixed asset, and short term receivables. The company was able to pay off a huge portion of its debts as evidenced by the 6.15% drop in total liabilities. Toops Tiles' preference for low risk financing is also indicated by the growth in equity by 17.10% (Annual Report 2005).
As a minority shareho...
As we know, an investor gains in stock investments through capital gains and dividends.
Table 2 shows the company's dividend for its common stockholders is escalating throughout the five-year-period of 2001-2005. Dividends increased almost tenfold from 1.00p to 9.50p. This growth in dividend per share indicates company's profitability as it is capable of paying its stockholders from the company's net income and still sustains its operation through its retained earnings.
The company's stock price is volatile indicated by periods of ups and downs which indicate the investor's perception of the company's profitability. Toops Tiles PLC has experienced an annual 3.85% slump in stock prices during 2005. However, the five-year-period covered in the analysis indicates a generally positive perception of the company's stocks as price rose by 160%.

SWOT Analysis
Strengths: Toops Tiles capitalizes on its strong brand equity as it is the largest tile and wood flooring specialist group. The company's operation is also supported by its wide distribution channel which provides accessibility to their customers. This also enables Toops Tiles to cover a larger geographical area. Offering products which complements to their major product line is also a plus as it provides more value to the customers.
Weaknesses: The major weakness of the company is its inability to create a better image to its investors like its stockholders. This is mirrored by the drop of the Toops Tiles' stock price amidst its good financial position. The company should consider launching a marketing program which will highlight the company's accomplishments. Another weakness lies in the company's supply chain. Toops Tiles' delivers inventory to its distribution facilities twice in a week. ...Show more

Summary

For one of the pension fund clients which is a minority shareholder in Toops Tiles PLC, I have prepared this brief with relevant information on the medium/long term sustainability of the client's investments.
Toops Tiles PLC is Britain's largest tile and wood flooring specialist group…
Author : vonbrendan
Sustainability of the Clients Investments essay example
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