D2 Evaluate the financial performance and position of Alfresco’s business using suitable Ratio analysis.

In this assignment I will be evaluating the financial performance and position of Alfresco’s business using suitable ratio analysis.

Firstly, by looking at the ratios, I am able to see that the organization is improving their ROCE, as the figures are shown to have doubled within the financial year from 46% in 2014 to 92% in 2015. This is able to suggest that the organization is generating a Net Profit of 92 pence for every £1 invested which also illustrates that the business is performing well compared to the average businesses as the Industry average states that the average ratio for the ROCE is 38%.

The Gross Profit margin of the organization between the years 2013-2015 is seen to be better than that of the Industry Average (36%). However, the organizations Gross Profit margin is seen to have decreased by 3% in 2015 compared to the margin of 2014- which demonstrates that the organization is performing better than the Industry Averages but isn’t performing to its expectations due to the decrease during in the financial year of 2015.

The Net Profit of the organization is shown to have decreased between the years 2013-2015 where the Net Profit is shown to have fallen 19% between the financial years. This is able to illustrate that the organizations expenses could possibly be expanding over the years, which as a result is causing the costs to be high and resulting into the decrease in profits. The Net Profit of the organization between the years is also lower than the Industry average (38%), which is able to imply the organization isn’t generating as much Net Profit as they should be.

The Stock Turnover of the organization is shown to have increased over the years, as the stock turnover in 2015 is 29 more days compared to 2013. 2013 and 2014 shows