An Interpretation of the ratios for Marks and Spencers and the House of

An Interpretation of the proportionalitys for label and Spencers and the bear of FraserFindings========This section of the report will be composed of an interpretation ofthe ratios for both companies. All ratios that form the ratio abbreviationwill be explained, and any trends from within ratios will behighlighted.boilersuit PERFORMANCEReturn on Capital Employed Net avail before tax and interest x100 = %Capital employedThe Return on Capital Employed ratio (R.O.C.E) is a hugely significantratio, and a great deal can be taken from this ratio. The ratiorelates to the meshwork earned in relation to the presbyopic- termination crownworkinvested in the business. The term capital employed in this equationmeans the owners capital plus any long term liabilities (for examplelong-term loans). This ratio shows the % return on capital invested inthe company. A business will aim to nominate this ratio as high percentageas possible. If the percentage return on capital invested is less than that prolonged elsewhere, then it may be wise to mean the business andinvest elsewhere.The ratio analysis shows that attach and Spencer saw a slight drop ontheir R.O.C.E from 1999 to 2000, however, they managed to increase theR.O.C.E the following year. The next year, 2002 shows the almostsignificant changes. The R.O.C.E increased from 9.61% in 2001, to20.89% in 2002. This is almost a one hundred twenty% increase on R.O.C.E.The House of Fraser had a slightly better R.O.C.E than Marks andSpencer in 2000, however, the following year they experienced a dropof more or less 1.5%. The result for 2002 shows that The House of Frasermanaged to almost double their R.O.C.E from 8.6% in 2001 to 15.91% in2002. Although this was a healthy increase, The House of Frasercurrently have a R.O.C.E th... ...tly. The company ineluctably to be moreflexible with the volume and style of clothing they stock. plenty aremuch more fashion conscious than they used to be, it is inhering forthe credibili ty of a company that they are consistently at the pinnacleof fashion.The results for the debtors collection period for Marks and Spencerare very worrying, curiously when compared to The House of Fraser.Marks and Spencer need to dramatically reduce the collection period inorder to avoid any problems in the future. Marks and Spencer currentlyoffer their customers the option of having a store card. Although intheory, this is a good idea, especially form a marketing perspectiveit can cause some(prenominal) problems in the long run. Customers can leavepayment for long periods of time. This leads to Marks and Spencer notbeing paid for stock they no longer own, and should have been paid for.