Marks and Spencer PLC financial performance- answer 3 questions Essay

Marks and Spencer PLC financial performance- answer 3 questions - Essay ExampleSee Table A below in relation to Appendices A, B, C and A-1.It may be noted that return on equity uses the formula where net profit is divided by the total stockholders equity. When compared to an average rate of 0.50% if capital was invested in a bank, its average ROE of 35% makes it to more than a seventy times and the rate is something very remarkable to find for investors. The 0.50% is the Bank of England ground rate could represent the risk free rate investment in the UK (Housepricecrash, 2011).Aside from positiveness, it is also appealing to know whether the company management is efficient. To measure the latter, this study uses return on assets (ROA). The companys average ROA of 9% for the last six years was high than industry average of 1.6%. GAP appeared to have higher average ROA but ROE is more controlling from the point of view of investors (Van Horne, 1992). By comparing the two ratios, i t appears that MKS is both profitable and efficient than industry.The understandable profitability and efficiency of the company is further proved by the companys net operating bank and net profit margin. The resulting average operating margin and average net profit margins for the past six years are 11% and 7% respectively as against the industry averages of 2.02% and 1.13% respectively. Operating margin results afterwards deducting cost of sales or services and operating expenses from gross margin (Helfert, 2001)MKSs net margin for the latest twelve-month period was posted at 5.7% as against industry average of 0.23%. See Table A. If the rate is compared the operating profit margin, it could be found that net profit margin is lower. This means that MKS needed to overtake other expenses to finance some of its borrowing. It further means that MKS is using other peoples money while improving profitability for