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Compass financial analysis and sources of finance used by the company - Essay Example

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Compass Financial Analysis and Sources of Finance Used by the Company By Code + University Name Date Introduction The financial performance of the Compass Group Plc (UK) can be analysed by using financial/accounting ratios, as explored under the following paragraphs…

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Compass financial analysis and sources of finance used by the company

Gross Profit Ratio It is calculated by the following formula. Gross profit ratio = [(Gross profit / Net sales) ? 100] The results are presented in Table 1. Table 1: Gross profit ratio of the Compass Group Plc Company ? million 2011 2010 Gross Profit 1,010 983 Net Sales 15,833 14,468 Gross profit ratio 6.38% 6.79% There is a decrease in the gross profit ratio that has been realized amounting from 6.79% in 2010 to 6.38% in 2011. This can be attributed to poor sales strategies and an increase in the cost of goods sold (Compass Group Plc 2011, p.63). Mark Up It is calculated as shown below. Mark up = (Sale price / Cost) – 1 The results are shown in Table 2. Table 2: Mark up of Compass Group Plc ? million 2011 2010 Sales price 15,833 14,468 Cost 14,823 13,485 Mark up 6.81% 7.29% The mark-up decreased slightly from 7.29% in 2010 to 6.81% in 2011 (Compass Group Plc 2011, p.63). This can be contributed to low sales turnover, coupled with an increase in the costs of sales. Net Profit Ratio It is calculated by means of the following formula: Net Profit Ratio = (Net profit / Net sales) ? 100. The results are shown in Table 3. ...
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