Accounting for Managers: Interpreting accounting information for decision-making

INTERPRETING FINANCIAL STATEMENTS 93

Table 7.6 Ottakar’s gearing ratios

2001 2000

Gearing 7,920 7,948

21,563 (13, 643 + 7 ,920) 20,302 (7, 948 + 12 ,354)

=36.7% =39.1%

Interest cover 3,520 1,342

727 562

=4.8 times =2.4 times

Table 7.7 Ottakar’s activity/efficiency ratio

2001 2000

Asset turnover 86,287 72,922

36,345 (18, 485 + 17 ,860) 34,238 (18, 025 + 16 ,213)

=237% =213%

Stock turnover 52,755 44,551

14,692 13,601

=3.6 turns =3.27 turns

=101 days (365/3.6) =112 days (365/3.27)

Creditors days 10,027 8,695

145 (52,755/365) 122 (44,551/365)

=69 days =71 days

Table 7.8 Ottakar’s shareholder return ratios

2001 2000

Dividend per share 503,000 302,000

20,121,000 20,082,000

=2.5p per share =1.5p per share

Dividend payout ratio 503 302

1,792 463

=28% =65%

Earnings per share (disclosed in

Profit and Loss account)

8.91p 2.31p

to identify any trends properly. Table 7.9 shows some of the information from
the five-year summary of performance in Ottakar’s annual report. These figures
show the sales growth over the five years much more clearly than do the two-year
ratios, although the increase in profits has been much lower. It also shows that the