Solvency Ratios This ratio used to measure the company’s ability to pay its debt indicates The lower a company's solvency ratio, the greater the probability that it will default on its debt obligations. • Debt to Equity = Total debt Total equity AVON= -4.5 ULTA= .65 REVLON= -5.9 This ratio represent the financial efficiency being used by the company and including both short term and long term debt. A Debt to Equity ratio of 2 indicates that the company gets two-thirds of its capital financing from debt and one-third from shareholder equity, so it borrows twice funding as it owns, this ratio as benchmark shouldn’t be more than 2 to avoid higher interest expense, and in some cases could affect the company credit score. • Debt to assets = Total debt Total assets This ratio indicate that the company gets all its capital finance from debt with negative equity This ratio is comparing between the total debt and the total assets to show the company’s ability to cover its debt using its assets, ratio greater than 1 shows that a big portion of debt is funded by assets, which means, the company has more liabilities than assets AVON= = 1.12 ULTA= .39 REVLON= 1.2 Avon products company has debt more than its
They fear the risk of another disaster of similar magnitude would cripple the company’s future due to ever-growing controversies and outrage by the public. Support from other firms and trade unions to improve safety conditions of factories would consequently elevate production costs in Bangladesh. Leaving Bangladesh would cost owners greatly but the existence of numerous manufacturing countries is plenty. Thanks to globalization, countries such as, Indonesia and Vietnam, would gladly welcome these clothing companies to place their production activities here. Not to mention, these developing countries offer similar benefits with Bangladesh namely, cheap labor and rent, abundant workers, and low restrictions on pollution emission.
Introduction Comtex Ltd produce a range of clothing such as dresses, jackets, intimate apparel and more. Comtex (HK) Ltd. is a joint venture in between the LT Apparel Group and the Hirdaramani Group of Companies. Currently, the company has one sourcing office in Jakarta and no factories in Indonesia. However, there is a decision regarding opening one in Solo in order to accommodate the increase in demand. Figure 1: A few of Comtex’s Customers Source: Comtex Sourcing - Customers Comtex’s current goal is to be the best sourcing and manufacturing company in the apparel and fashion industry.
Total debt also increased to €16.5 billion in 2014 from €15.6 billion in 2013. The decrease in current liabilities resulted from a significant decline in its financial liabilities to €1.9 billion from €2.9 billion (-36.0 percent), despite increases in trade payables (+24.98 percent), other liabilities (+13.6 percent), and income tax liabilities (+42.9 percent). Conversely, the increase in noncurrent liabilities resulted primarily from increases in provisions for pension and similar obligations (+52.9 percent) and other liabilities (+41.1 percent) despite the cut in deferred tax liabilities (-4.9 percent) and a decline in financial liabilities (-6.9 percent). Liquidity ratios indicate strictly controlled annual liquidity levels with strong reliance on leverage (around 30 percent of current assents) for its cash needs. Current ratio [current assets/current liabilities], the least conservative of the liquidity measures, is 0.7 both in 2014 and 2013 (Weiers, 2014).
The negative ratios suggest that the Equity investors have been losing their money invested in the company, since the company is incurring losses. Infact, the losses have increased over the years. For the year 2013-14 & 2014-15, even the Owner’s Equity was negative, suggesting that the Equity investors have eroded their reserves & surplus by funding the losses. Return on Assets Ratio: Return on assets (ROA) is an indicator of how profitable a company is relative to its total assets. ROA gives an idea as to how efficient management is at using its assets to generate earnings.
It is involved in the manufacturing of Chemicals that are used in the manufacturing if rubbers paints and etc. The company finances its day to day operations through internal cash flows and the available banking facilities. The company’s debt to equity ratio was calculated at 93.14, which means that the company’s liabilities are very high and the financing very much dependent on debt financing. The current ratio is 0.62 which also shows that company’s financial health is not good. And the quick ratio is even lower further signifying the critical condition that the company is in.
H&M gained competitive advantage of low risk and constant profit margin in Singapore and Malaysia, because it is politically stable. The reason why H&M pursues wholly owned subsidiary in countries such as in America and Canada is, because H&M can have a control (full) over their stores. Franchising can only be used when the
2.3.4 Return on Assets The return on assets ratio, often called the return on total assets, is a profitability ratio that measures the net income produced by total assets during a period by comparing net income to the average total assets. In other words, the return on assets ratio or ROA measures how efficiently a company can manage its assets to produce profits during a period. Since company assets' sole purpose is to generate revenues and produce profits, this ratio helps both management and investors see how well the company can convert its investments in assets into profits. For the analysis, the return on assets ratio measures how effectively a company can turn earns a return on its investment in assets. In other words, ROA shows how
LIQUIDITY ANALYSIS Liquidity ratios are the ratios that measure the ability of a company to meet its short term debt obligations. These ratios measure the ability of a company to pay off its short-term liabilities when they fall due. The liquidity ratios are a result of dividing cash and other liquid assets by the short term borrowings and current liabilities. They show the number of times the short term debt obligations are covered by the cash and liquid assets. If the value is greater than I, it means the short term obligations are fully covered.