Section 1.
Halfords Group PLC is a well-known retailer of car parts and services, along with the bicycle operating in the UK. The business uses different sources of funding in past three years, including: Retained earnings, long-term debt and inventories.
Retained earnings
Company’s retained earnings have made a gradual increase from 2012 to 2014. In 2012, the retained earnings made up 51.72% of the total equity; however, this proportion rose to 57.56% in 2014.

Graph 1. Retained Earnings in 2012 – 2014 period
It would be the changes in dividend policy through the fiscal years that positively determined the amount of earnings retained by the company (Skinner, 2006). In 2013, Halfords Group PLC decided to cut off the dividend to invest more in its stores as well as facilities (Telegraph, 23/5/2013). There was a decrease of the final dividend per share from 0.14 GBP in 2012 to 0.09 GBP in 2013, which partly helped declining the total dividend by 36.4% for the past three years. The strategy’s outcome resulted in, an appreciation of retained earnings of 26.4% in 3-year period.

Graph 2. Dividend paid per share in 2012 – 2014 period
Long-term debt
Halfords Group PLC’s long-term debt during the fiscal year to March 2014 has been significantly reduced 36.8% in comparison to the figure in March 2012. This deflation may indicate the company’s financial strategy in cutting down the non-current liabilities, due to the fact that there was a 25% downfall to 71 million £ in their annual profits at end-March 2013 (BBC, 23/5/2013), in order to lessen the financial risk of being unable to manage the interest payments. On the other hand, it can imply that Halfords Group PLC have sufficient earnings to pay down the debts, hence, it becomes less dependent on liabilities, as DeMarzo and Fishman (2007) stated.

Graph 3. Borrowings in long-term liabilities in 2012 –