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“WH Smith Plc” is a global travel retailer for news and approximately 11000 employees are achieving strategic goals through innovation. The aim and objectives of the report are focused on the financial comparison of two companies which is listed on the stock exchange. There are some limitations to financial comparison cost price level has changed and the financial statement does not recognize correct trends as well as structural changes of business. On the other hand, another company is “Page Group Plc” is a British based recruitment business company headquarters is Way Bridge. The background of the company is focusing on the market structure to compare the financial position of the company. A clear strategy has been followed by the specific company, which can be focusing on the organic business growth. The viewpoint of the corporate stakeholders of both companies is to maintain professional discipline. The global innovation process of “WH Smith Plc” is focusing on the sustainable return by identifying the necessary skills of the individual employees. “Page Group Plc” is included in ancillary services and dealing with recruitment consultancy in a large manner. “WH Smith Plc” is dealing with brand products including digital essentials and stationary products.
B) Analysis
Profitability ratio
“WH Smith PLC”
The profitability ratio is the financial matrix that generates business ability as well as calculated the generated earnings of the business. The profitability ratio of “WH Smith PLC” is computed by the gross profit margin as well as net profit margin which is almost 9.66 in 2019 (Whsmithplc.co.uk, 2022). The profitability ratio is the conclusive ratio that identifies the operational as well as efficiency level of the business. In order to determine how business efficiency level can be going forward as well as that provide significant information process by measuring efficiency level. The gross profit of “WH Smith PLC” is almost 56.81 in 2019 which can be recognized from the FAME database of the company. Approximately 10.02% EBIT margin has been recognized in 2019 from the FAME database of “WH Smith PLC”. [Referred to appendix 1]
“Page Group Plc”
Approximately 9.19% of EBIT has been calculated by the FAME database which is decreased by 0.83% as compared to “WH Smith PLC”. The financial performance of the business organization is compared by the ratio analysis methods (Zandi et al. 2019). The “Gross profit margin” of “Page Group Plc” is almost 52.58 in 2019 which can be recognized by the FAME database (Page.com, 2022).
Operational ratio
“WH Smith PLC”
The operational ratio is measured the company's management flexibility and some more efficient techniques to generate more revenue for a business. "Net asset turnover" and "Fixed asset turnover" are almost 0.95 and 0.90 for the financial years 2019 and 2020 (Whsmithplc.co.uk, 2022). Interest cover ratio almost (-13) and 28.00 for the financial year of 2019 and 2020, that is recognized from the FAME database.
“Page Group Plc”
Almost 3.78 and 4.58 has been recognized by the FAME database and that can measure the operational ability of “Page Group Plc”. Fixed asset turnover is almost 15.63which is increased by 12.00 as compared to “WH Smith PLC”. The abilities of the financial condition as well as performance measurement system are necessary to identify the operational performance of both companies. [Referred to appendix 2]
Structure ratios
“WH Smith PLC”
A current ratio of the company is calculated after identifying the current assets as well as current liabilities of the business. The current ratio is almost 0.84 and the liquidity ratio is almost 0.44 for the financial year 2019 and 2020. The accounting information is necessary for the business and the business performance of the organization is depending on that (Stolowy and Paugam, 2018). The expansion of the nonfinancial condition sometimes involves the ratio analysis methods.
“Page Group Plc”
Almost 1.80 current ratios of “Page Group Plc” is recognized from the FAME database which is almost 0.96 increased as compared to “WH Smith PLC”. The financial ratios are necessary to compare the financial as well as nonfinancial abilities of both business organizations. [Referred to appendix 2]
C) Performance factor
Financial factors
Insufficient inventory is the biggest difficulty for “WH Smith PLC” while the enterprise has changed its name to WH Smith & Son. The travel sales range of the products also needs to improve business process for making a strong profit. The financial factors are necessary for the business to rebuild its operational structure by a strong profit (Sierra-Garcia et al. 2018). The performance measurement system is an alternative way of “WH Smith PLC” and that can improve the organizational business performance.
On the other hand, “Page Group Plc” also focuses on "Enhancing the operating environment" of the business. The operating business environment is necessary to enhance profitability in the business. Sales volume also increases by the strategic process of “Page Group Plc” and more revenue is generated by the specific process. The expansion of the nonfinancial condition sometimes involves the ratio analysis methods.
Nonfinancial factors
Meeting all the requirements of the potential customers is the appropriate way that can be enhancing consumers' demand. “WH Smith PLC” also focuses on the specific non-financial factors to enhance consumers' trust. As compared to “Page Group Plc” the company is focusing on the non-financial performance to improve the basic relationships with the clients.
As compared to, “WH Smith PLC” planning and reporting systems are also focused on by the “Page Group Plc”. Sometimes non-financial goals are crucial to achieving long-term business goals and objectives (Dennis, 2018). The company also focuses on the relationship between the clients and candidates and that can also maintain a competitive reputation. The company is focusing on leveraged growth that can meet the potential requirements of a business.
D) Conclusion
Based on the above context it can be concluded that financial reporting is a standard way to more accurately track formal records of the business. Financial reporting is an important way to efficiently monitor the financial position, assets as well as liabilities of both organizations. Financial ratio analysis methods are necessary to compare financial as well as nonfinancial abilities. In order to track the financial records of the business, the "profit and loss statement" is crucial and that6 can be computed by the financial statement of both companies. Financial statements are the major reports to identify the comprehensive income of the business.
Reference list
Dennis, I., 2018. What is a conceptual framework for financial reporting?. Accounting in Europe, 15(3), pp.374-401.
Page.com, 2022, changing lives. Available at: https://www.page.com/home-page [Accessed on: 12th May, 2022]
Sierra-Garcia, L., Garcia-Benau, M.A. and Bollas-Araya, H.M., 2018. Empirical analysis of non-financial reporting by Spanish companies. Administrative Sciences, 8(3), p.29.
Stolowy, H. and Paugam, L., 2018. The expansion of non-financial reporting: an exploratory study. Accounting and Business Research, 48(5), pp.525-548.
Whsmithplc.co.uk, 2022, Global travel. Available at: https://www.whsmithplc.co.uk/ [Accessed on: 12th May, 2022]
Zandi, G., Sadiq, M. and Mohamad, S., 2019. Big-four auditors and financial reporting quality: evidence. Humanities & Social Sciences Reviews, 7(2), pp.369-375.
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