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Case Study- Company Situation (Financial Analysis & SWOT Analysis only)
Pages 4 (1004 words)
Company Situation Analysis Introduction Company Situation Analysis Section provides an overview of Zara’s financial and overall business performance. For this purpose, analysis of key financial ratios and SWOT analysis were conducted, respectively. Financial Analysis Calculation of the historical data of operation revenues of Inditex (see Appendix, Table 1) has shown 24% overall sales growth within the two- year period from 2010 to 2012.
Based on the rising revenues and margin data, it is possible to conclude that Inditex is at the growth phase of the life cycle, while Benetton, the GAP, and H&M are at maturity and stability phase, as their revenues and margins are declining. Financial Ratio Analysis - Inditex Profitability Gross profit margin of the company is fairly high – 59%, which implies that the company has effective outsourcing manufacturing strategy and has good relationships with suppliers. Both factors have positive impact on cost reduction. Operating profit margin is 18%, which means that the company makes 0,18 cents for every Euro of sales (before taxes). Net profit margin is 14% and it means that the company has good control over its costs. ROA ratio which is 19% means that the company is effectively using its investment, converting it into profit. ROE Liquidity Current ratio of the company is 2,0 suggests that the company has a good ability to pay back its short-term liabilities with the short-term assets it has. This means that Inditex is capable to continue its business expansion strategy and to avoid insolvency during the slower growth phases. ...
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