Marks and spencer assignment Coursework Example | Topics and Well Written Essays - 2000 words

Marks and spencer assignment - Coursework Example In the consolidated statement of financial position of M&S, the company have many subsidiaries or associate companies. However, when the consolidated cash flows are analysed, they reflect ‘acquisition of subsidiaries’ amounting to 5.4 million pounds in 2010. Operating segments-IFRS 8 Marks & Spencer Group Plc adopted International Financial Reporting Standard (IFRS) 8- operating segments on 29 March 2009. This Standard requires the internal reporting should be used as a base to report the performance of operating segments of an entity. The Group has reshaped its operating segments as UK and International and their performance is reviewed by the executive directors. On the basis of review, the chief executives ascertain the amount of the further resources. The UK segment comprises of the UK franchise operations and UK retail business. The International segment operates in the Republic of Ireland, Asia and Europe, together with international franchise operations. In the ye ar of 2009 and 2010, the Group made revenue of 8164.3 and 8567.9 billion pounds from UK operations respectively, and from the International segment, the Group posted 897.8 and 968.7 billion pounds in the year 2009 and 2010 respectively. Analysis The Group has shown less attractive financial performance. The above financial information suggests that the company earns more than 90% its revenue from its UK segment and the remaining comes from the International segment. Aggregately, much of the financial performance can be evaluated from the UK segment. In comparing the UK segment revenue of 2009 and 2010, the aggregate addition is around 403.6 (8567.9-8164.3), which is 4.94%. Also, there are no attractive figures of 2010, highlighting a stable growth in UK clothing and footwear. In terms of volume market share, only 11.2% in 2010 and the same figure was displayed in the year 2009. Furthermore, in terms of value market share, the growth percentage of 2010 is 11.0% and 10.7% in the year 2009. Without any doubt, such growth figures do not satisfy the current shareholders, nor could they attract the potential shareholders. The unattractive figures are also reported in UK market share food, in 2010 M&S posted mere 3.8 % in comparison with 3.9% in the year 2009. Instead of showing growth, in the UK market share of food segment, M&S has decreased and market share is slightly down (Kantar world panel, web).This means in the year of 2010, the company has only shown such a minimum level of revenue growth. Additionally, from the International segment the aggregate growth 70.9(968.7-897.8), which is 7.89%. Even this growth rate is not as attractive as it should be. Goodwill-impairment The Group does not amortise goodwill. However, it ensures that each year goodwill is tested for the purpose of impairment with the recoverable amount. And the recoverable amount is calculated from value in use. The Group uses the discount rate, changes in income and costs and growth rates as th e key assumptions for the value in use calculations. Additionally, the Group prepares forecasts of discounted cash flows. They are prepared with the use of previous financial performance and predications for future developments in market for a period of three years. Cash flow occurring beyond this time period; are assessed and extrapolated with the use of a growth rate of 2% on the assumption that it must not increase more than the long-term average growth rate for the Group’s retail businesses. However, the Group owns certain brands and they are