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The different objectives of WH Smiths

Different company have different objective, The WH Smith Company have different objective. This company main objective is to pick up his customer offer and grow the business by renewing existing contact and developing new formats and channels. WH Smith company business focusing things are travel sells a tailored range of Newspaper, Magazines, Books, and impulse products for people on the move and a broader convenience range in hospitals. The WH Smith Company one of the UK’s leading retailers, is made up of two core business presence. The company one of the United Kingdom top retail organisation, is made up two core business which are below (figure no 1) travel business and high street business.

Figure: 1

Travel business mainly focusing sells a tailored selection of newspaper; magazines, books, and others fancy products in airports, workplace, motorway service area hospitals, and train station bus station. The High Street sells a wide range of books, stationery, and newspaper and convenience offer of entertainment product according to the customer desire. The WH Smith services are depend on always customer choice on the high street and they are trust convenience retailer for customers at travel locations. Nowadays they have extensive store portfolio operating from 490 travel units and 565 high streets.

The WH Smith Company’s financial report according to the report base on 2009 the group goes into the year ahead well-positioned and they are showing us focus on the continued successful execution of them strategic plans. In this year the group argue continued to deliver good performance in the face of challenging economic condition. The company objective was trading environment and reflects the consistent and focused execution of company goal to grow travel business and to build on High Street’s positions as Britain’s most popular stationery, bookseller and newsagent. According to the financial report company continues to have a strong balance sheet and remains highly cash generative. The WH Smith retail group having profitability and cash generation remain priorities in both the travel and high street business.

Whsmith directors are responsible for the management of the business of the Company and may exercise all the powers of the Company subject to applicable legislation and regulation, the Company’s Memorandum and Articles of Association.

The consolidated Group financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. These are the standards, subsequent amendments and related interpretations issued and adopted by the International Accounting Standards Board (IASB) that have been endorsed by the European Union at the year end. The consolidated Group financial statements have also been prepared in accordance with IFRS adopted for use in the European Union and therefore comply with Article 4 of the EU IAS Regulation. The consolidated financial statements have been prepared on a going concern basis and Business Review.

The financial statements are drawn up on the historical cost basis of accounting. The financial information is rounded to the nearest million, except where otherwise indicated. The directors are required by the IAS Regulation to prepare the Group financial statements under International Financial Reporting Standards (IFRSs) as adopted by the European Union. The Group financial statements are also required by law to be properly prepared in accordance with the Companies Act 2006 and Article 4 of the IAS Regulation. International Accounting Standard 1 requires that IFRS financial statements present fairly for each financial year the Company’s financial position, financial performance and cash flows. This requires the faithful representation of the effects of transactions, other events and conditions in accordance with the definitions and recognition criteria for assets, liabilities, income and expenses set out in the International Accounting Standards Board’s ‘Framework for the preparation and presentation of financial statements’. In virtually all circumstances, a fair presentation will be achieved by compliance with all applicable IFRSs. However, directors are also required to properly select and apply accounting policies, present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information; and provide additional disclosures when compliance with the specific requirements in IFRSs is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity’s financial position and financial performance.

The directors have elected to prepare the parent company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). The parent company financials statements are required by law to give a true and fair view of the state of affairs of the Company. In preparing these financial statements, the directors are required

select suitable accounting policies and then apply them consistently;

make judgements and estimates that are reasonable and prudent;

state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and

prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.

The directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the parent company financial statements comply with the companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities, as described more fully in the Corporate Governance Report . The directors confirm that the above requirements have been complied with in the financial statements.

The directors confirm that, to the best of their knowledge: the financial statements, prepared in accordance with the relevant financial reporting framework, give a true and fair view of the assets, liabilities, financial position and profit or loss of the company and the undertakings included in the consolidation taken as a whole; and the management report contained in this report includes a fair review of the development and performance of the business and the position of the Company and the Group taken as a whole, together with a description of the principal risks and uncertainties that

Annual Report,(2009) Annual Report of WH Smith Retrieved on 10 March ,2010 from www.whsmith.co.uk WH Smith , (2010) Official Website

Net Profit Margin = Net profit/Turnover * 100

Year 2009 (£M)

Year 2008 (£M)

= 63/1340*100

= 4.7%

= 59/1352*100

= 4.4%

Return on capital Employed = Profit for the year/Equity share holder’s fund * 100

Year 2009 (£M)

Year 2008 (£M)

= 63/35*100

= 180

= 59/35*100

= 168.57

Return on capital Employed = Profit for the year/Equity share holder’s fund * 100

Year 2009 (£M)

Year 2008 (£M)

= 63/35*100

= 180

= 59/35*100

= 168.57

Efficiency Ratio- Efficiency ratios are the financial statement ratios that measure how effectively a business uses and controls its assets.

Debtor Collection Period = Debt Collection Period ratio, is the year's sales which were outstanding at the balance sheet date, express in days. A rough measure of the days of credit that a firm's offers to its suppliers/clients. The formula is as follows.

(FT Prentice Hall, 2003)

Debtor Collection Period = Average Debtors / Credit Sales * 365

Year 2009 (£M)

Year 2008 (£M)

= 61/1340*365

= 16.61 days

= 66/1352*365

= 17.81 days

Creditor payment period-This ratio is similar to the debtor’s turnover ratio. It compares creditors with the total credit purchases. It signifies the credit period enjoyed by the firm in paying creditors. Accounts payable include both sundry creditors and bills payable. Same as debtor’s turnover ratio, creditor’s turnover ratio can be calculated in two forms, creditor’s turnover ratio and average payment period.

Formula for Creditor payment period ratio = Average creditors/credit purchases*365

Year 2009 (£M)

Year 2008 (£M)

= 240.5/689*365

= 127.4days

= 239/867*365

= 100.61 days

Gearing Ratio - A term describing a financial ratio that compares some form of owner's equity (or capital) to borrowed funds. Gearing is a measure of financial leverage, demonstrating the degree to which a firm's activities are funded by owner's funds versus creditor's funds.

Among gearing ratios I want to present 2 Ratio’s

Formula for Gearing = LONG TERM LIABILITES/ EQUITY SHAREHOLDER’S FUND

Year 2009 (£M)

Year 2008 (£M)

= 25/35

= 0.71

= 24/35

= 0.69

Interest cover- calculation of a company's ability to meet its interest payments on outstanding debt. Interest coverage ratio is equal to earnings before interest and taxes for a time period, often one year, divided by interest expenses for the same time period. The lower the interest coverage ratio, the larger the debt burden is on the company. Also called interest coverage.

Formula of Interest cover = Net profit before Interest/ Interest paid

Year 2009 (£M)

Year 2008 (£M)

= 84 / 2

= 42 times

= 79 / 3

= 26 times

Liquidity Ratio - Liquid ratio is also termed as "Liquidity Ratio", "Acid Test Ratio" or "Quick Ratio". It is the ratio of liquid assets to current liabilities. The true liquidity refers to the ability of a firm to pay its short term obligations as and when they become due

Acid Test = CURRENT ASSETS- INVENTORIES/CURRENT LIABLITIES

Year 2009 (£M)

Year 2008 (£M)

= 262-151/281

= 0.39

= 241-147/303

= 0.31

Current Ratio - An indication of a company's ability to meet short-term debt obligations; the higher the ratio, the more liquid the company is. Current ratio is equal to current assets divided by current liabilities. If the current assets of a company are more than twice the current liabilities, then that company is generally considered to have good short financial strength. If current liabilities exceed current assets, then the company may have problems meeting its short-term obligations.

Current Ratio formula is:

 

Year 2009 (£M)

Year 2008 (£M)

= 262/281

= 0.93

= 241/303

= 0.79

Investment Ratio- A ratio that helps to determine whether an investment in a particular entity is likely to be profitable and safe.

Dividend per share - The the sum of declared dividend for every ordinary share issued. Dividend per share (DPS) is the total dividends paid out over an entire year (including interim dividends but not including special dividends) divided by the number of outstanding ordinary shares issued. 

DPS can be calculated by using the following formula:

Dividend Paid to Equity share holders/Average number of issued equity shares

Year 2009 (£M)

Year 2008 (£M)

= 78/155

= 0.50

= 23/167

= 0.13

Earnings per Share - The portion of a company's profit allocated to each outstanding share of common stock. Earnings per share serve as an indicator of a company's profitability.

Formula - Profit Available to equity share holders/Average no. Of issued equity shares

Year 2009 (£M)

Year 2008 (£M)

= 63/155

= 0.40

= 59/167

= 0.35

In my opinion this trading environment, they depend more than ever

on the commitment of them management team, staff and suppliers. They could not have achieved these results without their support. It particular thanks go to WHSmith staff in all areas of the Group, who have worked hard to deliver this set of results. The Group’s commitment to corporate responsibility (CR) remains just as relevant in difficult economic times, with the CR programme contributing to our risk management and overall business efficiency. I am pleased to write of this WHSmith company report that they have continued to make progress with company CR objectives, whether improving environmental efficiency by reducing energy consumption and waste, improving the forestry standards of company own-brand timber and paper products or maintaining their support for literacy projects. The WHSmith efforts continue to be recognised in the Business in the Community CR Index, where they are proud to have been awarded the highest ranking, Platinum, for the second year running.Whilst they do not anticipate any significant changes to the economic environment in the short-term, At last they believe that group goes into the year ahead well-positioned and they remain focused on the continued successful execution of their strategic plans.

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