Accounting And Finance

Introduction

JJB Sports plc is an UK's leading sports retailers. It started in Wigan in late 1900s with a single sport shop. JJB Sports acquired an honor of business of Sports division which was largest in sports 'clothing' retailer rather than sports 'equipment'. The shops rose from 120 shops in 1998 to 430 shops in 2005. In year 2005, launch of online shopping site expanded their market into cyberspace. JJB Sports also deal in health and fitness clubs and 6 soccer domes where it looks that people can enjoy the play five-a side football in leagues. It also owns the rights of Slazenger Golf in the UK and Europe. It also an official retail partner of two clubs Rangers and Everton F.C. which was an worthwhile initially of Ј18 million which can be seen Ј54 million over an decade and with Everton F.C. over Ј100 million in next coming decade.

JJB sports were having a major competition from its competitors by its rivals such as John David Group plc, Pentland Group, Blacks plc. JJB attained the business of Sports Division out sourcing their rivalry Sports Division plc in 1998. The maximum revenue would be generating for the year 2006 for making replica kit sales and launching of Premier Club Kit. The opening of the JJB website and purchasing of Golf TV and also investing in many other firms such as health clubs/superstores and rising of charities. The year 2006 was started in good profit revenue as due to major production of the Replica of World Cup 2006 of England T-Shirts.

RATIO ANALYSIS

PERFORMANCE RATIOS

1. Return on Capital Employed (ROCE):-It measures the efficiency of the assets generating profit.

Return on Capital Employed = *Profit before taxation and Interest

Total Assets less Current Liabilities

*Profit on ordinary activities before interest and taxation, plus any gross receivable interest.

Profit before

taxation and Interest

Return on

Capital Employed Total Assets less

Current Liabilities

2006 2005

34349 + 8896

476823 62106 + 9036

401168

9.07%

17.73%

The return on capital employed is not fair to look for consecutive 3 years where there has been fall of the Profit its been a bad second half for the company from the October 2005 as the Profit has also been seen a fall. Thus the major issue is to look back over the Capitals which are not been in a profit over the period.

2. Asset Turnover: - It is a measure of how efficiently assets are used to produce sales indicating the number of pound in sales produced by each amount pound invested in assets.

Sales

Asset Turnover =

Total Assets less Current Liabilities

Sales

Asset Turnover

Total Assets less

Current Liabilities 2006 2005

745238

476823 773339

401168

1.56

1.93

The asset turnover is good but the trend is decline but not may be some important notice must be made. However, it could be investing in the other firms such as health clubs/superstores which could be a having much more liabilities in other assets.

3. Net Profit Margin: - It measures how efficient the sales are in generating profits.

*Profit before taxation and Interest

Net Profit Margin =

Sales

*Profit before

Net Profit taxation and Interest

Margin

Sales (revenue)

2006 2005

34349 + 8896

745238 62106 + 9036

773339

5.80%

9.2%

*Profit on ordinary activities before interest and taxation, plus any gross receivable interest

Profits over the last few years can be mainly put down to the increasing strength of our competitors. Sports sub-sector is also going through a fundamental change with competitive pressures making trading conditions extremely challenging. Thus making a decrease