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Is now a good time to buy shares in Marks & Spencer PLC (500words) - Essay Example
Pages 2 (502 words)
Equities are considered as the most risky investments due to the fact that shareholders get the residual value of the assets left after paying off all other creditors in case a company goes into liquidation. Thus investors often take into account different factors such as financial performance of the firm, historical dividend payout patterns, general economic conditions as well as the current performance of the industry within which the firm operates before making an investment decision to buy any shares…
A historical review of the financial performance of the firm would suggest that its performance during last five years have remained consistent i.e. the overall revenue of the firm increased from $14.726Billion, in 2004, to $17.990 Billion in 2008- a growth of more than 22%. It is also critical to note however that the firm recorded negative growth in revenue during 2005 & 2006. (Hoovers.com, 2008). Operating Profit of the company showed an improved performance by recording a growth of over 65% during the same period i.e. Operating Income was $1.461 Billion in 2004, whereas in March 2008, it was 2.415Billion. The Net Operating Cash flows during last five years have been positive and have shown considerable growth from 2004 to 2008. Net Operating Cash Flows were $633.5 Million in 2004, whereas during 2008, Marks & Spencer recorded net positive cash flows of $2.133Billion. Return on equity remained consistent during last five years i.e. 0.6% in 2004 & 1.2% in 2008. ...
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