Investment in a publicly traded company

1 . Organization Selected

The company selected is Blacks Leisure Group Plc , which mainly operates in the Outdoor and O 'Neil . Outdoor consists of board wear retailing and wholesaling activities of clothing , footwear and equipment . O 'Neil comprises retailer of O 'Neil commodities and United Kingdom distributors under such brand mark . Our analysis will basically entail comparing this company with one of its main competitors JJB Sports Plc and identify which is the most optimal company to invest in

1 .2 Financial Analysis of Blacks Leisure Group Plc and JJB Sports Plc p

Six main accounting ratios will be applied to the companies selected in this section to cover the profitability efficiency , liquidity and stability in the firm 's valuation . The calculation of such ratios is shown in sub-section 1 .2 .5

1 .2 .1 Profitability and Efficiency

The financial ratios adopted reveal that the profitability and efficiency of Blacks Leisure Group Plc is better than that of JJB Sports Plc . The return on capital employed , which denotes the efficiency of management in generated income from the firm 's resources is superior for Blacks Leisure Group Plc . A high percentage in the return on capital employed is constantly desirable since it implies that the profitability of the organisation is considerably safe from unexpected movements in the external environment , such as the adoption of new competitive measures , economic slowdown and more . We have to remember that from the market analysis performed in the first section we noted that these corporations operation in a very dynamic and volatile market . Indeed the return on capital employed of both companies is low to ensure a sound margin of safety

The net profit generated from every ?100 of sales is better for Blacks Leisure Group Plc . From the calculations performed in sub-section 1 .2 .5 we can note that out of every ?100 sales , Blacks Leisure Group Plc makes a net profit of ?489 , while JJB Sports Plc performs a profit of ?409 This implies that this firm is more able in controlling costs and marketing goods that possess a high profit margin . Even though JJB Sports Plc holds ?15 ,699 higher profits in 2006 than its competing company , from the ratios performed we can state that the other firm is more efficient in its trading

1 .2 .2 Financial Position

The current assets ability to recoup the current liabilities is in favour of Blacks Leisure Group Plc , as portrayed by the higher current ratio . However , the ratio of the most liquid assets , excluding stock in relation to the short-term liabilities is superior for JJB Sports Plc . Overall the financial position of Blacks Leisure Group Plc is better than that of JJB Sports Plc , in spite of the high percentage of stock that Blacks Leisure Group Plc holds in relation to the current assets , which amounts to 63 .29 in comparison to 33 .22 of the other enterprise . In this respect it is important that the stock turn ratio of Blacks Leisure Group Plc is high , which...