Financial Comparison of Burberry and French Connection Research Paper

Financial Comparison of Burberry and French Connection - Research Paper Example This shows that the company can easily pay all its debts in case of liquidation due bankruptcy or other reasons. Current assets include cash and cash equivalents, accounts receivable and notes receivables, inventory end, office supplies (bond paper, folder and others), furniture and fixtures, office equipment (computers, calculators, adding machines and the like) and many others. When the total debt of Burberry amounting to 286 is divided by its equity to the tune of 387, the result is seventy -four percent. This shows that the company does have a good leverage ratio. The leverage ratio is a must analytical tool when borrowing huge sums of money from banks and other credit institutions. Based on the above analysis, Burberry has a better debt to equity ratio because its debt to equity ratio is seventy -four percent. On the other hand, French Connection has a bad leverage ratio because its debt to equity lower at only forty eight percent. The best debt When the net income of Burberry is divided by its revenues amounting to 106 is divided by its net sales or revenues of 743, the result is fourteen percent. This shows that the company should increase its net profit ratio by either increasing its revenues or decreasing its costs and or expenses. Based on the above analysis, Burberry has t... This shows that the company does have a good leverage ratio. The leverage ratio is a must analytical tool when borrowing huge sums of money from banks and other credit institutions.Based on the above analysis, Burberry has a better debt to equity ratio because its debt to equity ratio is seventy -four percent. On the other hand, French Connection has a bad leverage ratio because its debt to equity lower at only forty eight percent. The best debt To equity ratio is one hundred percent. C. French Connection Net profit Ratio = 11.08 = 0.05 246.3 When the net income of French Connection amounting to 11.08is divided by its revenues amounting to 246.3, the result is five percent. The company should try to increase its net profit by either increasing revenues or/ and decreasing costs and expenses. Burberry Net profit Ratio = Net profit = 106 = 0.14 Net sales 743 When the net income of Burberry is divided by its revenues amounting to 106 is divided by its net sales or revenues of 743, the result is fourteen percent. This shows that the company should increase its net profit ratio by either increasing its revenues or decreasing its costs and or expenses.Based on the above analysis, Burberry has the better net profit ratio because its fourteen percent net profit ratio is clearly higher than the net profit ratio of French Connection at only five percent. D. French Connection Return on Equity 11.080.10 = 110.46 = When the net income of French Connection amounting to 11.08 is divided by its equity amounting to 110.46, the result is ten percent. This shows that its return should increase by increasing revenues or decreasing

Essay Example | Topics and Well Written Essays - 4500 words

Essay Example Further, turnaround firms, in order to achieve their objectives do not entirely rely on uninterrupted, fast response time, information technology in order to achieve their objectives. Rather, their future applications play a great role in ensuring that they achieve their strategic objectives. On the other hand, factory firms heavily depend on reliable, -efficient, information technology support. It is only through highly reliable system that such firms can survive the danger of failing. However, although development applications in a factory are important in their own right, they are not entirely responsible for the success and profitability of the organization. Support firms however, do not associate performance with information technology; it has low strategic impact in their operations. Such firms rely on support systems in order to support their operations. Although they could survive for a long time without these applications, they require them to leverage their productivity. Organizations currently operate under high competitive environments. Porter argued that for an organization to survive high levels of competition, it must strategically place itself within these competitive factors (Karagiannopoulos, et al., 2005). In porter’s competitive model, he proposed five factors that would give a firm competitive advantage over other firms operating in the same industry. As porter argued, the five forces bring about industry rivalry of the existing firms. Threat of new entrants according to porter determines the ease with which customers can switch to products offered by competitors (p. 129). All industries have numerous substitute products available, and as such, factors such as price and quality contributes significantly to customers switching their products to their competitors. The ease of customers in finding a product offered by one company at a cheaper price, or higher quality goods increases the threat of