Financial Ratio Analysis - Rate of Return

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Additional Question 7

Now that you've read the resources on ROCE and ROTA here are the relevant data for Marks & Spencer to enable you to calculate the return on:

capital employed ratio
total assets ratio

What do you think of the performance of Marks & Spencer over these two years?

Consolidated profit and loss	Marks & Spencer plc
for the year	2002	2001
	£m	£m
Profit for the financial period	153.0	-5.5
Equity shareholders' funds	3,080.9	4,565.8
Total Fixed Assets	3,431.5	4,177.2
Total Current Assets	3,760.7	3,516.2

Did you get this?

These results confirm what we saw when we discussed profitability for M&S: the results for 2002 are significantly better than the results for 2001. We can now see that not only has M&S improved its turnover and its profit but it has also managed its capital employed and its total assets more efficiently, too.

However, we should stress that these rates of return ratios are not that spectacular. Interest rates at the bank, to take a very simple view, are around 4% so M&S hasn't done especially well in general terms: it's improved without doubt; but it has more improvements to make

You can move on to the next topic.

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