WPP PLC Financial Report Essay Example | Topics and Well Written Essays - 3000 words

WPP PLC Financial Report - Essay ExampleThe comparison of these ratios shows that current asset has not been utilized well as compared to fixed assets. The argumentation turnover ratio indicates that WPP PLC has replaced its stock nearly 62.4 times during the year. In other words, it can be state that the society generated $62.4 worth of sales for all(prenominal) $1 invested in stock.Debtor Days Collection PeriodDebtors__x 365 Cash Sales= 50 geezerhoodCreditor Days Payment PeriodCreditorsx 365Purchases= 125 daysDifference between creditor and debtor days for 2004 is collateralCreditor days - Debtor days= 125 days - 50 days= 75The firm takes advantageously longer (75 days longer, on average) to pass its creditors than it does to obtain payment from its debtors, having a ethical sign for the business.4- liquid state The ability of WPP PLC to pay its way or to satisfy financial obligations without difficulty as and when they become due can be analyzed with the help of followi ng ratiosCurrent RatioCurrent Assets___Current Liabilities= 0.87 1Acid essay (Or Quick) RatioCurrent Assets- StockCurrent Liabilities= 0.82 1Thus, the above ratios dont show a good home of the company in price of its current assets and liabilities. It reveals that the company doesnt have enough liquid assets to pay hit its short-term liabilities when they become due.5- SOLVENCY To obtain an indication of the companys longer-term solvency and its degree of financial risk, following ratios would be used caravan (Or Leverage) Ratio tote up Debt Capitalx 100 Total Equity Capital= 33.28%Debt RatioTotal Debt Capital_________x 100Total Assets (Fixed + Current)= 11.66%It shows that total debt capital of the... The above ratios reveal that the company had 5.79% return on capital employed in 2004. The double-dyed(a) profit and net profit ratios show that the company had 95.12% gross profit on sales while 10.58% net profit on sales. This gap makes clear that the company is paying heavy op erating costs, which is having a decreasing impact on its profitability.The above ratios show that WPP PLC generates appreciate and sales for its business 1.7 times of total assets, 3 times of fixed assets 62.4 times of stock (shows competency of stock) and 15.9 times of cash. The comparison of these ratios shows that current asset has not been utilized well as compared to fixed assets. The stock turnover ratio indicates that WPP PLC has replaced its stock almost 62.4 times during the year. In other words, it can be said that the company generated $62.4 worth of sales for every $1 invested in stock.Thus, the above ratios dont show a good position of the company in terms of its current assets and liabilities. It reveals that the company doesnt have enough liquid assets to pay off its short-term liabilities when they become due.The above ratios indicate the future share valuation of WPP PLC in terms of its current market price and Earnings Per Share (EPS).