Summative assignment on Next PLC Essay Example | Topics and Well Written Essays - 2500 words

Summative assignment on Next PLC - Essay Example J D Wetherspoon plc incorporated in the London Stock Exchange is a firm with the operations in the development and management of public houses. Incorporated in the year 1979, the company owns and operates 927 pubs offering food and drinks throughout the United Kingdom (Yahoo. Finance, 2014a).   The overall performance of the Wehttherspoon remained improving for the past five years of assessment. The liquidity position of the company is notably low which further declines under the pressure of inventory; while the profitability of the company is the declining as a result of increasing level of costs such as labour cost, marketing expenses and other repair and refurbishment etc (Reuters, 2013). The star year the in the recent most history of the company remained the year 2012 where Wetherspoon notable grew its revenue and profits in the year 2012. The underlying reason for such growth has been Euro 2012 football  tournament and the Diamond Jubilee in which the company opened net of 37 pubs in UK (BBC, 2012a). However, the impact of this event was clearly expected not to be sustained over a period of long term (BBC, 2012b). Despite this fact, the company is expanding its business to sustain the growth. For the purpose, expansion of the retail space of pubs is increasing, and the company has also expanded with a new pub in the Ireland (Yahoo. Finance, 2013). Expansion is widely being financed by debt in addition to the retained earnings (J D Wetherspoon Plc.,2014); hence, affecting the interest coverage ratio. Also, the gap between the EBITDA and EBIT is also increasing as the depreciation and the amortization expenses are increasing. Consistent expansion and rising cost h ave affected the margins within turn is reflected in the ROE OF the company in the year 2013 and onwards (BFN News,2013). For a similar reason, the EPS of the company has also declined. In the view of the capital expenditure that company has been incurring and planning to continue