73 times the profit of the sales margin while Home Retail Group can only afford to convert 0.32 of the sales into profitability. This shows that Kingfisher Plc is the more profitable of the two. Activity ratios inform the investors of the ability of the corporation to manage its assets efficiently for the sake of the going concern. I chose the inventory turnover, which is expressed as the cost of goods sold against the inventory. The ratio shows how many times inventory is created and sold in the period. Kingfisher Plc ratios for this is 0.49 while that for Home Retail Group is 3.9 therefore, Kingfisher Plc can only produce and sell inventory 0.49 times as compared to that of the Home Retail Group which is 3.9 times. Home Retail Group shows a stronger opportunity of continuing its operations into the future hence a higher going concern. Financial Leverage ratio provides the ability of the firm’s commitment to its fixed financial obligations. I chose the total debt to assets ratio, which is expressed as a ratio between the Total Debts and the Total Assets. This ratio shows the proportion of assets which is financed by debt whether Long term or short term. This proportion for Kingfisher Plc we have 0.79 of its assets being financed by debt while only 0.34 of Home Retail Group assets is financed by debt. Kingfisher Plc and Home Retail Group Plc.
Home Retail Group plc Full-Year Results. (2012, May 2), media. Retrieved March 3, 2013, from http://www.homeretailgroup.com/media/131788/2012_may_02_full_year_results_statement.pdf
Kingfisher plc - Investors & Media - Results & presentations - Preliminary results for the year ended 28 January 2012. (2013, March 3), Kingfisher plc. Retrieved March 3, 2013, from http://www.kingfisher.com/index.asp?pageid=247
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