What is a Business Ratio Report?
A Business Ratio Report compares the financial performance of top companies in a given UK industry, offering a quick and cost-effective competitor analysis tool for senior management. There are over 145 titles to choose from, each focussing on a key industry sector.
Where does the information come from?
All companies registered in the UK are required by law to file annual reports and accounts with Companies House. Business Ratio Reports use this invaluable source of company performance information to analyse a range of industries in the UK.
What should you look for?
The reports bring you marketing and financial information for limited British companies, registered at Companies House and actively trading in the area covered by the report.
The results given in a Business Ratio Report cover the previous 3 full accounting years, therefore any fluctuations in any area can be easily pinpointed.
The average results for each ratio together with the industry profile of the average company in the sector can be used as benchmarks to compare individual company performance.
All the major companies in the sector are ranked on the basis of sales, profits, total assets and employee numbers (PERFORMANCE LEAGUE TABLES - Section 4). The largest and smallest of the key players can be easily identified, while the relative size of any company can be assessed.
The average annual growth of each company's sales, profits, total assets and number of employees over the period being analysed is calculated and ranked (PERFORMANCE LEAGUE TABLES - Section 4). This key information highlights strong and weak performers, which companies are expanding or losing market share, increasing or decreasing asset investment, or taking on or shedding employees. The industry results are also given for comparison purposes.
Why use ratios?
Ratios are an invaluable tool for comparing the performance of companies on a like-for-like basis. Using ratios, the relative profitability, growth or debt levels, for example, of differently-sized companies can be directly measured or compared with ease.
Your Business Ratio Report focuses on the performance of key players in the industry it examines. Having closely analysed the sector, our editors have compared the largest companies, so you don?t have to.
A Business Ratio Report is, in effect, a complete financial reference for the sector.
What can the Report be used for?
A Business Ratio Report can be used to assess trading and financial information on:
- The Company - Size, Structure, Performance
- The Industry - Structure, Major Companies , Performance
How can the Reports be used for company analysis?
COMPANY PROFILES (Section 3) focuses on individual company performance. This part of the Report lists information on all the companies which have been included in the analysis. To make comparison between companies easier, the information is presented in a standard format for each. The areas covered include:
General Company Information
- Trading address
- Telephone and fax numbers
- Company secretary and directors names
- What the company does
- Who owns the company
- Which are the major subsidiaries
- Profit and Loss accounts for the previous 3 or 4 years
- Balance Sheet for the previous 3 or 4 years
- Financial Ratios grouped by profitability, efficiency, debt, employee performance and growth.
League Table Positions
- How the company performs relative to all the others in the sector
How can the Reports be used for industry analysis?
The main sections to evaluate are:
- INDUSTRY OVERVIEW
- PERFORMANCE LEAGUE TABLES
- INDUSTRY PROFILE
A good place to start is with the INDUSTRY OVERVIEW (Section 2). This is a short summary which provides a useful introduction to the information supplied in the Report. Key findings from the Report are presented, including tables of the top companies in terms of sales and profit margin.
To examine the industry in more detail, just turn to the PERFORMANCE LEAGUE TABLES (Section 4). This section ranks companies by a range of ratios to help you gauge which are the strongest performing companies in any criteria. In addition, each table brings you the average result for the sector as a whole, so you have a benchmark for comparison purposes.
The INDUSTRY PROFILE (Section 5) lists average Profit and Loss and Balance Sheet data for companies in a particular sector or industry. This can be used as a benchmark for comparison to individual company profiles in the Report.
Which Ratios should be analysed?
There is no definitive list of which ratios are best to use as each highlights a different aspect of performance. Much depends upon the kind of industry you are examining. As a result, it?s important to view the ratios in the wider context of industry performance, using the averages provided as benchmarks.
For example, the following ratios could be used to start the process: Return on Capital, Pre-tax Profit Margin, Current Ratio and Total Debt to Net Worth.
In addition, it can be useful to see where any result falls within the overall rankings given as this provides a measure of relative success (PERFORMANCE LEAGUE TABLES Section 4).
In order to help you, the ratios within the Report have been grouped according to the performance areas they focus on:
Whether profit is being made and at what level is a basic measure of trading success. The key ratios are:
- Return on capital
- Return on total assets
- Pre-tax profit margin
- Return on investment
These results relate to company assets. Are they being efficiently employed, has investment led to higher sales or profits? The main ratios are:
- Asset utilisation
- Sales to fixed assets
- Stocks to sales
- Debtor days outstanding
Two aspects of debts are highlighted ? long and short-term. Short term debt is examined in the liquidity ratios which basically measure the company/industry?s ability to meet short-term financial obligations. The gearing ratios look at the longer term situation. The ratios focussed on in this section are:
Liquidity - current ratio, quick ratio (acid test)
Gearing - total debt to net worth, equity gearing, income gearing (interest cover)
Employees are a key component of company success. However, performance can be hard to measure and compare. In order to simplify analysis, the following ratios are provided to compare performance by key financial measures:
- Pay per employee
- Sales per employee
- Capital employed per employee
- Pay to sales
Where can I get further help?
On which companies are included?
A full list of companies included and criteria for inclusion/exclusion is given in COMPANY SELECTION (Section 1) and COMPANY INDEX (Section 8)
On terminology and definitions?
Explanations of the financial terms and ratios in the Report are listed alphabetically in DEFINITIONS (Section 7)
On how the information has been compiled?
The way information from different companies has been standardised for presentation purposes is explained in ANALYSIS NOTES (Section 6)
On any aspect of the Report?
You can contact us directly:
Tel: 0845 504 0452