The use of ratios in financial analysis: How retail management can help

In his approach to the performance of retail companies, the financial analyst uses a number of operating ratios — net profit to sales, return on capital employed, sales per £ of payroll, sales and profits per store, and others. How meaningful are these ratios? And if they give a fair picture of present performance, what indications do they offer for the future? Colin Paterson, speaking at a Capel‐Cure conference, argues that close contact between the analyst and retail management is essential.