Assignment Cover Sheet
Submitted by: 1168212
Date Sent: 6th December, 2012
Module Title: Accounting and Financial Management
Module Code: IB8010
Date/Year of Module: July 2012
Submission Deadline: 11:00 AM 6th December, 2012.
Number of Pages:13
Question: [Question Number and Title, or Description of Project]
“This is to certify that the work I am submitting is my own. All external references and sources are clearly acknowledged and identified within the contents. I am aware of the University of Warwick regulation concerning plagiarism and collusion.
No substantial part(s) of the work submitted here has also been submitted by me in other assessments for accredited courses …show more content…
Kesko performance ratios Operational inefficiencies is the reason for lower operating margin in 2011 than 2010. For every €1 only 3.5 was left as profit and this fell to 2.9p. Operating expenses relative to sales revenue was higher in 2011 than 2010. The lower ROCE was caused partly because the business is incurring inventories purchase cost relative to sales revenue and partly due to higher operating expenses. Asset turnover and sales per area is up mainly due to increase in capital expenditure in store area.
Working Capital Inv. Days *365 COGS Trade receivables * 365 Turnover Trade payables * 365 COGS Kesko 38.77 276,305.00 7,546.00 27.01 226,300.00 8,776.00 51.33 396,025.00 7,546.00 Change 5.87% 4.74% -2.19% Ahold 23.9 22.9 9.1 39.8 9.5 39.2
Inventory days Debtor days Creditor days
316,455.00 8,163.00 255,500.00 9,460.00 419,020.00 8,163.00
36.62 25.79 52.48
Figure 4. Kesko working capital ratios
At the end of the year, the inventory still had 51days of sales. Inventories are being held longer before being turned over. The average settlement period for debtors has increased implying that goods are sold on credit and cash is being tied down. This will have an effect on cash flows which we already see is
down by over 50%. Average settlement period for creditors is however reduced which may encourage