Chapter One Executive Summary
Industry Averages
The industry averages presented in this review have been calculated using the latest company accounts filed
by the firms listed in Chapter Four. When calculating the industry averages, we have been careful to exclude
unusually high or low figures (ie plus or minus two standard deviations from the mean). Guarding against spurious
figures ensures that our averages remain a truer representation of the industry. Chapter Four presents the latest
four years of accounts available for each company. Using a series of seven graphs, company performance figures
are presented alongside the following industry averages making it easy to compare individual companies with
the industry.
2002 2003 2004 2005 2006 2007
Gross Profit Margin (%) 24.34 29.06 29.37 29.38 29.61 20.95
Operating Profit Margin (%) -0.66 6.67 5.93 3.79 5.63 3.06
Profit Before Interest & Tax Margin (%) 0.04 7.31 6.64 4.51 6.71 3.49
Pre-tax Profit Margin (%) -2.27 6.80 6.33 -2.68 6.29 3.08
Return on Total Assets (%) -1.15 11.82 11.74 -3.00 10.34 8.58
Return on Equity (%) 5.73 18.18 13.91 -10.49 13.78 15.84
Current Ratio 1.28 1.14 1.62 1.65 1.44 1.40
Quick Ratio 1.16 0.88 1.36 1.47 1.16 1.11
Debt Ratio 0.61 0.59 0.48 0.54 0.50 0.60
Credit Given (Days) 49 33 30 35 30 20
Credit Taken (Days) 36 29 25 37 34 43
Times Interest Earned 13.48 16.60 26.25 18.36 15.79 14.14
Fixed Asset Turnover 0.73 0.52 0.58 0.41 0.36 0.22
Stock Turnover 14.99 9.59 12.77 13.19 11.15 10.64
Debtor Turnover 7.12 11.18 12.09 10.06 11.96 18.40
Turnover per Employee (£) 465,882 428,385 390,177 346,150 339,175 297,159
Average Wage (£) 42,350 33,655 36,020 37,446 36,232 20,346
Turnover Growth (% of 2005) 88.94 100.64 102.34 100.00 104.31 108.50
Operating Profit Growth (% of 2005) 10.41 134.35 129.58 100.00 102.01 131.55
The Best Practice averages show what is achieveable for a well managed firm and the averages for Big Companies
and Small Companies show whether investment in scale is likely to be rewarded. The difference between the
various series of averages on each graph gives a measure of the variability of the results in a sector.
All Companies - These averages provide a benchmark for any company in the sector. Chapter Four shows these
averages as a direct comparison in the Ratio Analysis area. The trends in these averages can be thought of as
indicating industry trends. So the graphs in Chapter Four are providing a benchmark of the industry performance
over time against which each company can be measured.
Big Companies - Calculated using the data available for the largest companies (based on Total Assets). The
attractions of consolidation within the industry can be seen by considering these averages and comparing them
to the averages for All Companies.
Small Companies - Calculated using the data available for the smallest companies (based on Total Assets). The
averages for smaller companies indicate their attractiveness for potential take-overs ie if the average performance
of smaller companies exceeds that for larger companies then they become attractive acquisition targets.
Best Practice - Calculated using the data for companies that are both financially strong and have been consistently
profitable over previous years. Irregardless of size some companies are quite simply better managed or better
placed to take advantage of industry changes than others so these averages show the potential for firms within
this sector.
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