Table of contents
Review of Company Profile
Analysis of Financial Position
Financial and Non-Financial Factors
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List of figures
Figure 1: Du Pont Analysis
Figure 2: Relationships amongst Profitability measures
Figure 3: Profit Margin Ratio
Figure 4: Gross Profit Rate
Figure 5: Assets turnover Ratio
Figure 6: Return on Assets Ratio Comparison
Figure 7: Debt to Total Assets
Figure 8: Cash Debt Coverage
Figure 9: Current ratio
Figure 10: Quick Ratio
Figure 11: Oroton Share trend
Figure 12: Hour Glass Share trend
Figure 13: Earnings and Dividends per share
Figure 14: Dupont Comparative Analysis of Oroton and Hour Glass
List of Appendices
Appendix 1: Ratio Analysis
Appendix 2: Income Statement – Horizontal Analysis
Appendix 3: Balance Sheets – Horizontal Analysis
Appendix 4: Cash Flow Statements – Horizontal Analysis
Appendix 5: Liquidity graphs
Appendix 6: Profitability graphs
Appendix 7: Solvency graphs
Appendix 8: Share Trends
2. Review of Company Profile (approx 300 words)
The Hour Glass is a public company based in singapore. Their primary business is retailing of high end watches through their own stores in six countries, 11 in Singapore, 5 in Malaysia, 3 in Thailand, 1 in both Hong Kong and Japan and 3 in Australia. They describe themselves as “Asia’s leading specialist luxury watch retailer.” They also operate 2 museums of watches to promote horology in asia, a successful marketing strategy by making Asian consumers more appreciative of specialist luxury watches. The Hour Glass concentrate primarily on retailing and do not manufacture or design any of their own product, instead being sales agents for many big name watch brands like Rolex, Omega, Breitling, Bulgari and Longines.
Orotongroup is a public company based in Australia. Their primary business is retailing of clothing, leather goods and fashion accessories through the Oroton Brand and they also hold the exclusive rights to Polo Ralph Lauren for the Australian and New Zealand markets. They operate out of their own premises in Australia and New Zealand and their Oroton branded products are distributed globally through specialist retailers overseas. Oroton design and manufacture their own products with the exception of their Polo Ralph Lauren brand.
The retail industry in Australia is currently suffering from a downturn due to reduced consumer sentiment and reduced spending due to threat of rising interest rates, the introduction of a carbon tax, local and abroad political issues and global financial issues. Luxury goods retailing however has not suffered as significant a decline as lower end areas of the market. Both companies have defied this trend and have grown both their sales revenue and profit consistently over the last several years. While The Hour Glass suffered a small decline in revenue in FY2009 they have since recovered to above previous sales highs experienced in FY2008, Orotongroup has seen constant growth over the last 5 financial years. With both companies being publicly listed they have a board of directors with a leadership group reporting to them. Both company boards consist mainly of independent directors, The Hour Glass with 75% directors being independent and Orotongroup with 50%. Oroton Groups CEO, Sally Macdonald, is also the Managing director. The Hour Glass does not have any of their executive management team sitting on their Board of Directors.
3. Analysis of Financial Position(approx 800 words)
Du Pont Analysis
One of the most valuable insights of financial analysis is the interconnectedness between the various components of the financial statements as seen in the Du Pont Analysis. [Carlon et al. 2009, p.676] We have used this model as the basis for our financial analysis.
To begin our analysis of these...
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