Financial Analysis for International Company

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RECOMMENDATION FOR MANAGING FINANCIAL RISKS: 11 6.2. RECOMMENDATION FOR MANAGING OPERATIONAL RISKS 11 6.3. RECOMMENDATION FOR MANAGING MARKET PLACE RISKS 12 6.4. RECOMMENDATION FOR MANAGING MACRO-ECONOMIC RISKS 12 7. References 13 1. INTRODUCTION: Dixons Retail Plc is the largest electrical and computing retailer in Europe. The company offers wide range of products and services and it operates in 26 countries. The company sells the following products: Consumer electronics, Personal computers, Domestic appliances, Photographic equipment and Communication products. Principal products like Brown goods, white goods, computing products and mobile phones are sold by the company. The company is a multi-channel retailer that sells products over the internet, in stores and by phone and it also provides product support services to the customers. B2B sales and services are also carried out by the company. (Forbes.com LLC , 2011) 1.1ABOUT DIXONS RETAIL PLC: The company offers wide range of products and services and it operates in 26 countries. In 13 countries, the company has approx. 1,200 stores. The company has over 38,000 employees and it holds number 1 position in the UK &amp. Ireland, Greece, Nordics and the Czech Republic. (Dixons Retail Plc, 2011) The company operates four divisions which are as follows: 1. UK &amp. Ireland 2. Nordics 3. Other International 4. E-commerce Important information related to these four divisions is given below in the table: (Dixons Retail Plc, 2011) UK &amp. Ireland Nordics Other International E-commerce SALES ?3.8bn ?2.3bn ?1.2bn ?0.8bn EBIT ?71.3m ?105.6m (?21.6m) ?0.9m MARKET POSITION Number 1 Number 1 Number 1 in Greece, Number 2 in Italy and Czech Leading internet operator across Europe SHARE OF GROUP 47% 28% 15% 10% NO. OF EMPLOYEES 23,091 7,343 6,191 1,398 NO. OF STORES 642 285 308 – 1.2 TURNOVER: In 2006, Dixons Retail’s turnover was ?7,403,400,000 then in 2007 it was ?7,929,700,000 i.e. an increase of 7.108%. In 2008, the turnover was ?8,545,900,000 then in 2009 it was ?8,364,600,000 i.e., a decrease of 2.122%. In 2010, the company’s turnover was ?8,532,500,000 i.e. an increase of 2.007%. (WorkSMART, nd) 2. FINANCIAL POSITION: In 2007, Dixons Retail’s profit was ?114,100,000 then in 2008 it faced a loss of ?192,800,000. In 2009, the company again faced a loss of ?140,400,000 but then in 2010 Dixons Retail achieved a profit of ?112,700,000. In 2011, the company faces a loss of ?224,100,000. (WorkSMART, nd) In 2007, Dixons Retail’s revenue was ?7929.70m then in 2008 it was ?8488.00m i.e. an increase of 7.041%. In 2009, the revenue was ?8317.80m then in 2010 it was ?8532.50m i.e. an increase of 2.581%. In 2011, the company’s revenue is ?8341.80m i.e. a decrease of 2.235%. (London Stock Exchange PLC, 2011) Other important Dixons Retail’s financial indicators are given below in the table: DIXONS RETAIL FINANCIAL INDICATORS (Telegraph Media Group Limited, 2011) MAY 2011 MAY 2010 MAY 2009 MAY 2008 MAY 2007 P/E RATIO -2.18 17.42 -4.04 -4.81 89.45 ROCE -14.86 6.56 -14.74 2.4 OPERATING MARGIN -2.93 0.7 -2.67 -3.05 0.42 RETURN ON ASSETS -5.61 2.48 -4.96 -5.68 1.08 EV/BIT -4.17 9.09 -11.73 -7.70 19.43 GEARING RATIO 44.93 37.49 53.73 31.79 23.54 P/BV RATIO 0.8 1.41 1.31 1.48 2.31 P/CASHFLOW RATIO 2.89 14.16 -46.19 6.13 12.57 QUICK RATIO 0.34 0.34 0.32 0.38 0.5 TURNOVER PER SHARE 2.261 2.441 2.825 3.504 3.186 PEG (HISTORICAL GROWTH) 0.06 -0.46 0.12 0.73 -165.66 EPS GROWTH 7.00% 50.00% -90.00%