Card Factory began processes in 1997 with just a single store and has expanded its store estate primarily through biological development into a market-leading value shop with a nationwide attendance. The Group’s stores are in an extensive range of sites including on high roads in small municipalities through to main cities, shopping centre growths, out-of-town retail commons and sweatshop outlet centres. Card Factory emphases on the worth and mid-market segments of the UK’s huge and tough welcoming cards market, which also gives wide variety of other excellence goods, which includes small gifts that can be given at parties or other celebrations.
Strength:
1.Very great competence in organization
Weakness
Oppurtuinties
Threats:
1.Delivery charges are much more compared
2. Online competition is much more nowadays.
3.The British greeting cards are actually not growing
Pestel
Political: More pressure from the environment,
Economic: Less income in low season, low growth as there is more competition , there is weak consumer expenditure.
Social: Social needs and wants changes so it’s difficult to cope with it.
Technological: Today the technology is fast, technology is to be updated., Marketing, Market investigation tools.
Legal: Wellbeing and protection law, Customer rights, Service law
Environmental: Ecologically friendly, Recycling accommodations, High left-over one-use
Core Context
Internal context :
Chief Executive officer: Richard Hayes
Non-executive director: Geoff Cooper
Chief executive officer designate: Karen Hubbard
Chief financial officer: Darren Bryant
Company secretary :Shiv Sable
Chairman : Geoff Cooper
Substantial shareholders
KPMG LLP 1 Sovereign Square, Sovereign St, Leeds LS1 4DA Tel: 0113 231 3000 serve as an auditor
They will linger to control our investment in EPOS and our augmented ability to analyse more gritty sales data has donated to the robust LFL performance in FY16. The new organization is now organized in around 60% of stores and, given the features of our trade estate, we can use this data to advance the presentation of the whole land. The commercial aims to border a noteworthy proportion of intentional distant coinage stock acquisitions. A number of onward privets (counting organized options) are in residence and, where suitable, hedge accounting is adopted by the Group.
2016-92.2 Million
2015 84.9 MILLION
The turnover of Card factory has increased by 8 present in 2016 as compared to 2015.
The net debt has increased by around 20 million in 2016 by taking more loans to expand the business
The profit has increased by 6 million as compared to 2015
Operating cash flow has increased by 8.59 present. This is may be for the meeting of the investment plans.
It is an important tool for judging the performance of the company. It is important the company’s condition can be noted down. Ratio is analysed for Card factory for 2015 and 2016 and is gauged on the results of presentation ratios, working money ratios, liquidity and creditworthiness ratios. In the subsequent controls, the exceptional items are encompassed because they are distressing the cost of auctions and therefore, the complete operating profit and presentation of the Business.
We see that there is an increment in the Return on capital employed which actually indicates good performance and also includes good return on investments. Operating profits has also increased which is actually a very good sign. Whereas if we see WH smith profits , there is not much increase from the last year profit , however there is an increase in ROCE for WH smith.
Below is the assessment of Card factory presentation by taking figures of both years 2015 and 2016 and compared it with the WH smith imperfect ratios and to the average competitors’ ratio
Return on capital employed : Return on capital employed (ROCE) is a monetary ratio that helps in movements of company’s effectiveness . A higher ROCE means higher utilisation of the capital. We see that the ROCE should always be higher than the company’s total capital cost , if it’s not happening than we would think that the company is not employing its capital effectively. ROCE is actually higher for 2016 as compared for 2015
Asset turnover : This ratio expresses about how resourcefully the company uses its assets to produce income. The higher Asset income ratio shows better enactment of the company. In this case, ATO of CARD FACTORY in 2016 is more than 2015 which indicates CARD FACTORY has professionally and effectively uses their possessions to generate more revenue. The asset turnover is much more for the factory than for WH smith
Net profit : This tells us about the net profit . We see that the factory net profit was higher in 2016 as compared to 2015 . But if we see overall the net profit for Card factory is less than WH smith. Overall Card factory performance is not that sound as compared to WH smith
Return on assets: It measures the business ability to adapt assets into incomes. Though for Card factor the ROA is increasing from 2015 to 2016 . But if we see as a competition point of view the ROA for WH smith is much better than Card factory. We see that the management of card factory does not manage their assets much productively.
Return on equity : Return on equity (ROE) is the amount of net revenue refunded as a percentage of stockholders equity. Return on equity procedures a corporation’s effectiveness by see-through how much profit a corporation generates with the cash stockholders have invested.
For the card factory the ROE has almost increased double and it is a good indication. If we compare both , the card factory is actually at a profit as there for WH smith is low as compared to Card factory (Annual report, 2017)
We see that current ratio as decreased for the card factory which actually does not indicate sound performance by the company. But if we see overall , the current ratio is 0 for WH smith . So the Card factory financial health is actually nice. Current ratio and acid test ratio is 0 for WH smith which is actually not good
This ratio is calculated to determine the accuracy of long-term monetary location of the company.
Interest Coverage : It measures company’s aptitude to meet its interest expenditures dues. In this case, Card factory Interest coverage ratio has increased over the year and it was also higher than WH smith ratio. This designates that Card factory has better monetary advantage compared to its competitor.
Gearing: Gearing Ratio quantify the monetary risk of the company. In this case, Card factory Gearing ratio has decreased minutely over the year but it was lower than the average competitor’s ratio. Hence, it shows that Card factory assets are adequate to meet its compulsions or requirements (Annual report, 2017)
Conclusion
By doing all the ratio analysis we get to company’s financial position. By ratio calculation all the position of the company is disclosed which actually helps in deciding as to where to invest. By doing the ratio analysis, it has shown that the overall 2016 financial performance and position of Card factory has increased. WH smith is a good investment as ROCE is better in WH smith.
Below is the attached Balance sheet and Income Statement for Card factory
Below attached balance sheet for WH smith
References :
Annual report (2017).Card factory. [online] Available at: https://www.annualreports.com/HostedData/AnnualReports/PDF/LSE_CARD_2016.pdf [Accessed 9th April. 2017].
Annual report (2017).WH smith. [online] Available at: https://www.whsmithplc.co.uk/docs/20203_WH_Smith_AR16_WEB_2016-11-04.pdf [Accessed 9th April. 2017]
MBA school (2017).Card factory. [online] Available at: https://www.mbaskool.com/brandguide/lifestyle-and-retail/9236-card-factory.html [Accessed 9th April. 2017]
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