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Good partnerships, like good marriages, don`t work on the basis of ownership or control. It takes effort and commitment and enthusiasm from both sides if either is to realize the hoped-for-benefits.
The summarised financial accounts for 2007 and 2008 and comparative industry is addressed to the managers of Stannards Superstore plc highlighting trends in the company's performance.
Part one will analyse the past performance by using appropriate and relevant ratios and analysis techniques. The first part will mainly comprise liquidity, probability and investor measurements.
Part two of the report will focus on "Stannards bidding plans for a franchise to lease and operate a retail outlet in the London 2012 Olympic Park"  . As the London 2012 Olympics is a public-private partnership (PPP) this part of the report will illustrate suitable financial and non-financial performance measures for a PPP, relevant internal and external company performance measures and will explain the key uses of the chosen measurements for managers.
The end of the report shows analysed ratios and performance measurements which will be summarised in a conclusion
Overall, Stannards' performance shows a downward trend in 2008. However, there was some significant variation in the figures for individual parts of the accounts.
The current assets as a whole for 2008 decreased slightly by 3.2% to £692k (£715k in 2007) while the current liabilities had an increase of about 6.5% to £792k.
Short-term liquidity as measured decreased compared to 2007 and is below the industrial average when excluding stock.  3These were mainly due to lower cash (-20% to 2007) and significantly lower bank deposits of £25k (-55% to 2007).  Furthermore, the trade creditors also show a significant change of £71k to £368k. These are almost 24% more than in 2007. Despite the sales turnover going down by 9.4% in 2008, there was a marked rise in trade debtors since 2007 (just over 50% to £47k in 2008) and a small increase in stock (3%). The working capital cycle is between four and five weeks in 2008. Compared with 2007 it takes 10 days less to get the payments to the suppliers back from the customers. This is a good indication of good management of working capital. 
When comparing the acid test ratio with the industry average both are almost the same (about 0.4 to 1). By calculating the ratio in 2007 it reveals a downward trend (0.46 to 1 in 2007).  Although the current asset ratio mirrors this deteriorating trend (0.93:1 in 2008 and 1.04:1 in 2007), Stannards will not go into immediate liquidation as tax might have not been paid.  Furthermore, for entities especially such as Stannards a ratio of less than 1 to 1 is not a problem as Stannards is collecting enough amounts of cash daily.  In order to improve these results, the managers are advised to take action. 
There is an upward trend in longer-term solvency because of a lower gearing in 2008 as there were no bank loans.  The industrial average (50%) shows a higher gearing even if the overdraft is counted as a long-term finance (31.6% in 2008 and 40.6% in 2007). 
Stannards is generating sufficient revenues to satisfy interest expenses.  The interest cover ratio for 2008 (10%) is lower than those of 2007 (14%) both are still above the industry ratio (8%) and high enough to meet the interest obligations.
Stannards Superstore financial year has been difficult as poor trading had a negative impact on sales and profit. Sales declined by 9.4% to just over £1m, trading profit by almost 19% to just over £100k and the gross profit by almost 20% to £91k. This might reflect the lack of capital investment  and also the trading conditions in which Stannards operates. In 2008 the return on net assets (5.1%) decreased compared to 2007 (6%). Net asset turnover has been slowing which reflects the lower sales.  However, both ratios are still above industry average. The return on sales fell from about 11% in 2007 to just under 10% in 2008. Both figures are below industry average (12%) which might be a good indicator for Stannards position on the market.
Shareholders earnings per share have been retained unchanged. In 2008 the dividend cover has increased slightly to 0.31 times. Ordinary dividends at industry could be paid out 3 times of current earnings. The company's yield is £2.60 for every £100 invested. These are 48% under industry average but equal to the yield in 2007. The portion of Stannards profit allocated to each outstanding share of common stock fell to 9 pence in 2008. These are 2 pence below 2007 figure and 6 pence below the industrial average. The figures above show that the shareholders still get paid very well in spite of the liquidity downward trend.
The London Olympic Park is located in Stratford, a place in the London Borough of Newham in East London. By 2012 a land area of 2.5 square kilometers will be transformed into "the largest new urban park in Europe for 150 years, with a lasting legacy  of world-class sports facilities, homes for the community that will live in the area and unrivalled green open spaces around the Park after the Games". 
This huge project will be financed by London's taxpayers (£625 million) before 2012 through a higher council tax. Chancellor Gordon Brown said "The government will also foot the bill for any overspend".  The London Development Agency is giving an additional £250 million. A further £1.5 billion are raised from the new National Lottery game. Furthermore, corporate sponsors such as British Telecom, Siemens, British Airways and Microsoft  will cover another huge part. "The sponsors will be able to dominate the commercial aspects of the Games". 
Most contracts and agreements with the financial sponsors will be carried out as Public and Private Partnership. According to the Organisation for Economic Co-Operation and Development is a public-private partnership "an arrangement between a government entity (central or sub-national) and a private entity established for the purpose of providing an essential service or facility to the public". 
According to Paton there are three different sectors for PPP's: 
Commercial organisations (e.g. Stannards Superstore)
Public sector (e.g. Government)
The social economy or third sector (voluntary sector)
The commercial sector focuses mainly on profit which implies competitive positioning, measurable targets, human resource management, optimisation and performance related remuneration. The public sector prosecutes other main targets based on accountability (e.g. concepts of service, impartiality, universality). The third sector focuses on commitment (influence of shared values). 
The Organisation for Economic Co-Operation and Development pointed that performance indicators should mainly include:
efficiency measures (input / output relation),
effectiveness measures (e.g. level of population),
service quality measures,
financial performance measures and
process and activity measures.
Public-Private Partnership (PPP) measurements
To measure the performance of a PPP in terms of value for money there could be set a performance benchmark with other great events such as Olympic Games in other Countries (Beijing 2008)  or football world cup. The UK government uses target benchmarks to measure key performances.  Key Performance Indicators (KPI) are more often used for an acceptable range of performance instead of a single-point measure of performance. KPI's are typically less flexible and long-term orientated.  They are using concepts such as Kaplan and Nortons Balanced Scorecard. The Balanced Scorecard is a strategic tool for measuring vision and strategy. There are four general: Financial-, Customer-, Internal process-, and Innovation and learning perspective. 
Another key measurement for the London 2012 Olympics is brand equity. The former Prime Minister Tony Blair said: "When people see the brand, we want them to be inspired to make a positive change in their life".  There are many opportunities to measure a brand (firm-, product- and consumer level).  Sustainability measurements are another important measurement. London 2012 stakeholder share building the venues and infrastructure, focusing on five key areas (involving combating climate change, reducing waste, enhancing biodiversity, promoting inclusion, and encouraging healthy living). They include benchmarks, audits, indexes and accounting. 
Internal Company Performance Measurements
Like public-private measurements, internal company measurements can also be separated in financial and non-financial measurements.
Financial measurements can be used for short- and long term incentives. There are different categories: 
relative return on financial measurement (in %)
increase or decrease (in £)
Relative value or percentage other return on income, and
various combinations of the first three.
There are three financial statements to measure the financial situation within the company, Income Statement, the Cash Flow Statement, and the Balance Sheet. 
The Income Statement shows the income and expenses for a set period of time. It is issued to the shareholders on a quarterly and year end basis. The Cash Flow Statement is showing "the source and amount of cash receipts and payments".  The Balance Sheet is a sheet or statement of financial position. It is a "summary of a person's or organization's balances". This includes a list of assets, liabilities, and ownership equity. 
Financial Measurements can be calculated in relative returns (e.g. ROA, ROS, Net asset turnover) or in absolute changes (e.g. EBIT, EBITDA, gross margin etc.) 
The management are also looking at other factors, such as non-financial assets, when running a company. These factors create value of a strategy. It is important to define each measurement because of output and time.  Finally, some important non-financial measurements, especially for Stannards for the London Olympic Park are: culture, organizational objectives, customer satisfaction and expense budget. Nevertheless, non-financial performance measurements are more difficult to quantify, but might be a better indicator of an organisations "true" performance. However, these measurements are not requiring the definition of consistency (prescribed by GAAP). 
External Company Performance Measurements
External measurements can be sorted in the same two categories, financial and non-financial. There are three different financial measurements outside the company.
Firstly, the performance of other companies are typically compared with the own performance. These could also be the industry average. However, no company is like the other it might be sometimes difficult to compare two companies ratios direct, especially when they are calculated different. On the other hand, by comparing companies by trends it might give a more realistic picture.  Secondly, some companies are rated by outside organisations, for example by sector. And lastly, general economic factors could adjust a company. The internal performance could be compared with external measurements to compare Stannards with others performance.  Although the non-financial measurements are categorised in the same types of measurement, they measure the non-financial parts such as customer satisfaction and image.
Performance measurements are widely used for long term planning, identifying, improvement needs (strategy management) and external reporting (communication).  To be able to compare individual objectives or aims with the actual output it is important to measure the performance. Furthermore, in order to improve the performance it could be find out what policies and processes work and why they work. Key to effective management and business planning is information about the performance. External performance information allows effective accountability.  Stannards managers might use performance measurements for a better internal management and for accountability purposes.
Based on this report, Stannards performance is deteriorating. Stannards Superstore financial year has been difficult as poor trading had a negative impact on sales and profit. Negative influences might come from the financial crisis and/or bad weather condition in 2008.  The current problems might continue over the next years. Although Stannards managers are making use of some important measurements it is not efficient to ensure that the performance will yield any expected value for money for their future plans in 2012.  Thus, the performance must be controlled throughout its life. Furthermore, there is no evidence that a franchise in the London 2012 Olympic Park will bring success in the long term. The Times reported a Transport for London source said "This report provides clear evidence that the Public Private Partnership is not working and yet it is being buried in order not to embarrass London's Olympic bid. The fiasco of the Millennium Dome, financed in this way, is a reminder that it does not guarantee any kind of return on the investment."