2. Financial Standards |
Our analysis of Timberland’s financial results for the year 2009 will be based on the following financial standards:
1. Intra-company Standards, as represented by the past financial performances of the company. The financial information provided in the annual report for the year 2008 was processed to generate the following financial ratios:
| Timberland Corporation31 December 2008 |
I - Profitability Ratios | |
Return on Assets (ROA) | 9% |
Return on Equity (ROE) | 7% |
II - Liquidity Ratios | |
Current Ratio/Working Capital Ratio | 2,80 |
Quick Ratio/Acid Test Ratio | 2,03 |
Times Interest Earned | 118,81 |
Debt Ratio | 32% |
Debt to Equity | 47% |
III - Activity Ratios | |
Accounts receivable turnover ratio (times) | 8,09 |
Number of days’ sales in receivables (days) | 45 |
Inventory turnover ratio (times) | 3,97 |
Number of days’ sales in inventory (days) | 92 |
Number of days in cash operating cycle | 137 |
2. Competitor Standards, as represented by the financial performances of 2 other corporations operating in the same business in the USA (Textile - Apparel Footwear & Accessories Industry). Selected competitors are:
* Nike - Nike, Inc's principal business activity is the design, development and worldwide marketing of high quality footwear, apparel, equipment, and accessory products. Nike is the largest seller of athletic footwear and athletic apparel in the world.
Financial information related to this competitor for the last three years (essentially, income statement and balance sheet) was acquired from financial websites such as Forbes (www.forbes;com), Google Finance & Yahoo Finance. Calculated financial ratios came as follow:
| Nike Corporation |
| 04/2009 | 04/2008 | 04/2007 |
I - Profitability Ratios | | | |
Return on Assets (ROA) | 11% | 15% | 14% |
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(2010, 12). Accounting Ratios Calculation. StudyMode.com. Retrieved 12, 2010, from http://www.studymode.com/essays/Accounting-Ratios-Calculation-534188.html
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