The above table provides a detailed outlook of the key financial ratios of the two firms in year 2009 and reflects the individual performance of each firm in the retail industry. It is critical to understand that the choice of Next Plc as the closes competitor of M&S is because of the fact that both the firms are in retail clothing industry. Though M&S offer other services such as food and financial services however, its main business always remained the sale of clothing. Similarly, Next Plc is also a retail clothing giant in UK industry and as such the comparison between the two makes sense due to relative similarities between the two entities.
M&S is one of the leading retail chains in the World with more than 100 years of history of success. However, the recent performance of the firm indicates that all may not be good and future may further impair the capability of the firm to generate the consistent profitability and value for its shareholders. A brief look at the recent financial performance of the firm indicates that the profitability has drastically declined in 2009 by almost 4% as compared to year 2008. Similarly, return on equity has further declined to a level where it may not be able to support the overall expectations of the stock markets to sustain the current market prices of the shares. What is also significant to note that the firm’s asset management, leverage as well as interest coverage has further declined to a level where it may further hamper the future growth of the firm?
Similarly, the performance of Next Plc, one of the leading competitors of the firm is also not satisfactory due to the current financial meltdown experienced by the firms in general. Various ratios indicate that Next Plc performed better as compared to M&S.
The data shown in question 1 indicate that the overall performance of Next Plc is far superior to the performance of M&S. The five year’s data indicate that the liquidity ratios