Business Financial Performance Analyzer

This tool allows you to examine the business financial performance over a number of years. Its calculates and shows the relevant financial measures for you to investigate trends in margins, return on investments, quality of earnings and cash generation records.

+Features

Produces the relevant financial measures for analyzing business performance.
Calculates the return on total assets for measuring how efficient management is in utilizing the company’s asset base.
Calculates the return on equity for assessing the rate of return on the funds that belong to the shareholders.
Calculates the free cash flow return on invested capital for gauging the cash return you can expected to get if you are the owner of the business.
Computes operating profit margin and operating cash flow margin to give you an idea of how much profit and cash a company makes for each dollar or pound of sales.
Calculates the cash conversion cycle measure to illustrate how well the company’s working capital is managed.
Work out the appropriate financial measures for assessing the company’s quality of earnings.

+Which UK company?

A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z

Financial Performance Analysis for "WPP WPP PLC" from 2006 to 2023

Return on Total Assets

ROTA:

3.4%
Overall average
3%
Last 3-year average
2%
Trailing 12 months

Return on Equity

ROE:

7.4%
Overall average
10.3%
Last 3-year average
3.1%
Trailing 12 months

Free Cashflow Return on Invested Capital

FCFROIC:

13.4%
Overall average
11.2%
Last 3-year average
11.6%
Trailing 12 months

Return on Sales

Operating Profit
Margin:

7.5%
Overall average
6.3%
Last 3-year average
3.8%
Trailing 12 months

Operating Cashflow
Margin:

15.9%
Overall average
12.4%
Last 3-year average
11.9%
Trailing 12 months

Working Capital Management

52 Days
Overall average
22 Days
Last 3-year average
23 Days
Trailing 12 months

Quality Of Earnings

Cash Conversion
Ratio:

3.5x
Overall average
9.3x
Last 3-year average
16x
Trailing 12 months
Asset Replacement
Ratio:

1x
Overall average
0.5x
Last 3-year average
0.5x
Trailing 12 months
Tax Rate:

22.6%
Overall average
36.6%
Last 3-year average
43.1%
Trailing 12 months
Free Cash Flow:

£1,168.22m
Overall average
£959.83m
Last 3-year average
£1,021m
Trailing 12 months
100%
Cash generation record

Summary

For every £100 invested in assets, the company generates an average return of £0.03 in operating profit each year.
With 12.7% of total funds provided by shareholders, every £100 invested, the company generates an average return of £0.07 in net profit each year.
For every £100 invested, the company generates an average return of £0.13 in cash for it owners.
Poor cost controls as evidence by unstable operating margin with every £100 of sales, £0.07 is converted to profit.
Average cash conversion ratio is 3.5x which means accounting profits are being converted into cash profits.
Average asset replacement ratio is 1x which means the company is investing in new assets to remain competitive.
The company needs funds to finance 52 days of working capital requirements.
From 2006 to 2023 the company is able to generate free cash flow every year.

Overall Financial Performance Rating

+Tips & Advice

Return on total assets looks at the operating efficiency of the total enterprise, while return on equity points to how that operating efficiency is translated into benefit to the shareholders. Consistent return on total assets between 8% to 12% would be very sufficient.
Return on equity measures the absolute return delivered to the shareholders. A good return on equity (15% is a very satisfactory return) with little debts employed, drives company value and creates greater wealth for owners.
It is possible to inflate the return on total assets ratio merely by writing off resources usually as goodwill.
Cash-based businesses such as supermarkets usually have negative cash conversion cycle as credits are given by the suppliers and customers paid for goods in cash immediately. This means the suppliers provide interest-free funds to the company.
Operating profit margin indicates the company’s pricing power and how well and consistent the company in managing it costs. Low margin indicates lack of pricing power. Decreasing margins or margins often lower than the industry average points to poor cost controls. A cost conscience company usually has stable or improving operating profit margins.
Operating cash flow margin illustrates the business’s cash generation ability from the sales it generated. Strong cash flow provides funds for capital investments, pay down debts and reward investors with dividend payments.
The cash conversion cycle tells you how fast a company can convert its products into cash through sales. For example, a 70 days cash conversion cycle would mean on average it takes 70 days for a company to turn purchasing inventories into cash sales. The shorter the cycle, the less time capital is being tied up and the more cash is available to run the business. Bad management of working capital can lead to the risk of not having enough cash available for the day to day business operations.
Stock share price is closely linked with earnings. Sustainable and rising earnings will give rise to increase share price. Measures that can be use to judge the quality of earnings are: operating cash flow is bigger than operating profit i.e. Cash Conversion Ratio; capital expenditure is greater than depreciation .i.e. Asset Replacement Ratio; tax rate is not artificially low as profit may be inflated and the business needs to generate at least some free cash flow.