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Next Plc Executive Summary

544 Words3 Pages

Management makes economic decisions on the basis of the financial statements. They are concerned about the financial leverage of the firm so they can check debt-to-equity to find out how its assets are financed. In 2017, the debt-to-equity of Next Plc lows down to 3.7% as compared to previous year, which means business is operated by the investors and performing well. Managers are also concerned about how to pay back its short-term obligations as well as they use financial statements to find out the liquidity. They use current/cash ratio to find the answer to the question. Management also keeps an eye on company's short-term debts to find out short-term liquidity of the firm which shows its current position. The acid test ratio of 2017 shows that NEXT Plc can easily convert its assets to cash to pay its short-term debts. They are also interested to check the …show more content…

Employees want to know about the profitability and stability of the employers. They are also concerned about conditions of the employment. To find out their concerns they keep an eye on Return on equity, return on assets as well as profit margins. Company's ROE falls so it shows efficiency in generating money falls. A slightly low return on assets than the previous year shows that the profitability of the assets of the company falls down a little. Shareholders consider financial statements to make decisions regarding buying and selling their shares. They are also concerned about the maximization of their wealth. They take into account the profitability by showing interest in return on sales or net profit margins. They also see cash flows of the company and look for working capital ratio through financial data. It may also include receivables turnover ratio, to know how fast products can be sold and how fast collection can be made from those sales. Payable turnover is also measured to know how a company pays

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