Without any help from us, you have all of the data (repeated below) to enable you to calculate the ROWC ratio for the Carphone Warehouse ... do that and interpret what you find.
Source:
http://www.bized.co.uk/
| Consolidated Profit and Loss Account | 31 March 2001 | 25 March 2000 |
|---|---|---|
| £'000 | £'000 | |
| Profit before interest and taxation | 45,012 | 25,300 |
| Total Fixed Assets | 396,175 | 100,279 |
| Net current assets (liabilities) | 93,180 | -2,660 |
| ROWC For the Carphone Warehouse | |||
|---|---|---|---|
| 31 March 2001 | Profit before Interest and Tax Working Capital | ___________ | = _____% |
| 25 March 2000 | Profit before Interest and Tax Working Capital | ___________ | = _____% |
You will find this additional information of use for your analysis:
| Carphone Warehouse Consolidated Balance Sheet | 31 March 2001 | 25 March 2000 |
|---|---|---|
| Current assets | £'000 | £'000 |
| Stock | 52,437 | 51,842 |
| Debtors due within one year | 149,200 | 82,826 |
| Short-term investments | 46,374 | 11,144 |
| Cash at bank and in hand | 67,517 | 25,348 |
| Total Current Assets | 315,528 | 171,160 |
| Creditors: Amounts falling due within one year | -222,348 | -173,820 |
| Net current assets (liabilities) | 93,180 | -2,660 |
Did you get this?
There has been a major improvement in ROWC between the two years - there is now a positive working capital balance. In 2000 there was a negative balance. Moreover, whilst current liabilities have increased by 28%, other aspects of working capital have increased sufficiently to more than offset that. The Carphone Warehouse is in a much better position in 2001 than it was in 2000.
You can now attempt some additional questions or move on to Inter-firm Comparisons
Source:
http://www.bized.co.uk/
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