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In: Finance

Please consider the following data from 2017-2019 of a firm in the fashion industry who is...

Please consider the following data from 2017-2019 of a firm in the fashion industry who is expanding its business by increasing the number of products (from T-shirts only the company is expanding its product portfolio into jumpers, trousers, skirts, now launching also swimwear and sportswear) General rules You may have access to your notes, slides, and internet (to access library or other search engines) Please read carefully the following instructions and be sure to address carefully each point 2 | Page 2017 2018 2019

2017 ; 2018; 2019 Sales 7786.0; 9411.5; 10383.0 Equity 2228.5 ; 2284.1 ; 2490.9 lt debt 2.7; 550.9; 550.3 Total assets 4428.9; 5343.9; 5672.6 Operaing income 894.0 ;1053.9; 503.9 Current liabilities 1936.0 ;2156.0; 2190.0 Current assets 1530.0 ;1697.0 ;1748.0

Based on these data, please compute the main financial KPIs (ROI, ROS, ROE, ROA) and construct their trend over these three years.

− How is the company performing?

− What do these KPIs suggest?

− What is your take on this evidence if you also include the analysis of the Capital Turnover and check it compared with the trends of the sales?

Expert Solution

Firstly we calculate all the main Key Performance Indicators for the business

The company seems to perform moderately inwell 2018 after slight decrease in KPIs from earlier yr.

But in 2019 the performance has heavily downgraded will fall majority of the KPIs.

The Return of Assets has deteriorated denoting the company is unable to effectively utilize its Assets to generate sufficient profit compared to earlier years.

However the sales of the company has continuously improved over the years which is evident that the company must be expanding its products portfolio with introduction of new line of products.

A company's working capital turnover ratio can be-ve when a company's current liabilities exceed its current assets.

A high turnover ratio shows that management is being very efficient in using a company’s short-term assets and liabilities for supporting sales

So it is evident from the analysis that capital turnover is consistent with growth in sales YoY.

jeff jeffy answered 1 year ago

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