what are performance or sales ratios? how national express plc has adopted IFRS standards?
Financial Performance Ratios is used to depict the performance of a business. These ratios are derived from the items of a financial statement. Sales to Assets Ratio demonstrates how well the business is efficiently deploying assets of the business and using them to generate sales. Return on sales (ROS) is a ratio widely used to evaluate an entity's operating performance. It is also known as "operating profit margin" or "operating margin". ROS indicates how much profit an entity makes after paying for variable costs of production such as wages, raw materials, etc. (but before interest and tax). It is the return achieved from standard operations and does not include unique or one off transactions. ROS is usually expressed as a percentage of sales (revenue). Asset Turnover Ratios indicate how efficiently assets of a firm are utilized to generate sales. As a company registered and listed in an EU country, National Express Group PLC has been required to adopt IFRS with effect from 1 January 2005. The results for the year ended 31 December 2005 represent the Group’s first annual report and accounts prepared in accordance with its accounting policies under IFRS. Previously the Group reported under UK generally accepted accounting policies (“UK GAAP”). UK GAAP to IFRS reconciliations of equity for 1 January 2004 and 31 December 2004, and of profit for the year ended 31 December 2004 are summarised in the Annual Report and Accounts. The Group is required to comply with international accounting requirements under IAS 1 ‘Presentation of Financial Information’ except in extremely rare circumstances where management concludes that compliance would be so misleading that it would conflict with the objective to ‘present fairly’ its accounts. On this basis, the Group has departed from the requirements of IAS 19 ‘Retirement Benefits’ and has accounted for its constructive but not legal obligations for the Railways Pension Scheme (“RPS”) under the terms of its UK rail franchise agreements. Details of the background and rationale for this departure are provided in the Annual Report and Accounts, including the impact on the Group’s reported financial performance and position of adopting this accounting treatment as required by IAS 1. The Company has taken advantage of the exemption provided under section 230 of the Companies Act 1985 not to publish its individual income statement and related notes.