Can anyone put these ratios into English ?? !!
Ratios
Date Of Accounts 31/05/10 31/05/09 31/05/08 31/05/07 -
Pre-tax profit margin % -41.37 -54.89 -10.01 -7.39 -
Current ratio 0.19 0.37 0.37 0.12 -
Sales/Net Working Capital -1.85 -2.50 -2.66 -0.85 -
Gearing % 485.30 241.20 166.80 171.70 -
Equity in % 20.20 30.60 38.90 35.40 -
Creditor Days 95.42 82.08 108.16 165.69 -
Debtor Days 30.66 30.61 67.12 35.36 -
Liquidity/Acid Test 0.17 0.35 0.36 0.12 -
Return On Capital Employed % -28.30 -32.28 -6.17 -3.16 -
Return On Total Assets Employed % -19.46 -23.48 -4.50 -2 -
Current Debt Ratio 2.39 1.25 .90 1.28 -
Total Debt Ratio 6.67 3.60 2.33 2.51 -
Stock Turnover Ratio % 0.61 0.90 0.67 0.62 -
Return on Net Assets Employed % -149.39 -108.11 -15.04 -7.05
I'll have a go, although I haven't seen the accounts yet:
1) Pre-tax profit margin - Pre-tax profit (or loss in our case!) as a percentage of turnover
2) Current ratio - Ratio of current assets to current liabilities - effectively shows the ability of the club to manage its short-term working capital; anything positive is fine, if it's negative it indicates a serious issue
3) Sales/Net working capital - Not sure on this one
4) Gearing % - The ratio of long-term debt as a percentage of equity - this reflects the increasing investment from Randy
5) Equity in % - Not sure on this one either
6) Creditor days - The average length of time it takes us to pay our suppliers (in days)
7) Debtor days - The average length of time our credit customers (ie not fans!) took to pay their debts
8.) Liquidity/acid test - A more extreme version of the current ratio. In manufacturing companies this would be the same calculation but excluding things like stock which you couldn't be sure of turning into cash at very short notice. I wouldn't expect the club has much stock not sure why it's (admittedly only slightly) different. It shows the clubs ability to pay it's day-to-day expenditure in more strict circumstances
9) Return on capital employed - the amount of profit for every £1 of capital Randy's invested. While we continue to make losses this will continue to be negative
10) Return on total assets employed - the same as above but for every £1 of assets in the business.
11) & 12) Without looking at the accounts I'm not sure what these are.
13) & 14) Pretty meaningless to the Villa. Ratios for ratios sake!!
Hope that helps!
The other thing to remember is the accruals concept - a nuance in accounting which states that you account for income and expenditure in the period they relate to, not in the period they are paid or received. The big impact this has on football clubs is in transfer fees paid. Where we spend £24m on a 30 goals a season striker and get him to sign a 4 year contract, the £24m is spread over the 4 yrs for the purposes of the profit and loss account, rather than all being taken as a cost at the point the player is signed. This means that big transfer fees can continue to generate losses many years after they were incurred.
I wouldn't therefore expect the Villa to be making profits any time soon, regardless of whether they're making any money!