2.COMPANY AND MARKET OVERVIEW2
3.FINANCIAL STATEMENTS ANALYSIS OVERVIEW5
3.2Total operational profits6
3.4Long Lived Assets7
Appendix 1: Balance Sheet Horizontal Analysis16
Appendix 2: Income Statement Horizontal Analysis17
Appendix 3: Balance Sheet Vertical Analysis18
Appendix 4: Income Statement Vertical Analysis19
Appendix 5: List of Ratios19
Appendix 6: Trend Analysis 2005-200919
In the present report we will analyze the financial position of Forel S.A. as depicted in the company’s financial statements for the accounting period 2008-2009. Our selection of Forel S.A. is based on its dynamic presence in the women clothing industry in Greece. We believe that it would be quite interesting to analyze the financial situation of a local company that despite the current financial turmoil, it continues to maintain its good profitability.
We will begin our report with a brief overview of the company’s key characteristics in comparison with its main competitors. The main body of the report will cover Forel’s financial statements’ horizontal and vertical analysis of the accounts that are worth mentioning, followed by a trend analysis over a five (5) year period. We have selected to analyze the revenues, total operational profits, current assets, long lived assets, non-operational revenues and expenses and the dividends accounts. An analysis of the most important financial ratios will follow, classified and analyzed in respective groups. Consequently, we will comment the liquidity, efficiency, profitability and gearing ratios.
COMPANY AND MARKET OVERVIEW
Greece, a small- to medium-sized textile and clothing producer, has suffered considerably in recent years from the removal of European quotas and other restraints, which have exposed it to the full force of low-cost competition from Asian exporters.
Companies traditionally characterized by the quality of their products, are forced to transfer their operations in cheaper markets in the South East Europe or import products from the Asian market. This business decision drives many times to low quality products not allowing Greek companies to successfully compete foreign companies represented in the Greek market. The forthcoming years are expected to be difficult for the clothing industry since the need for lower cost will be even stronger.
Despite the difficult situation the Greek companies should overcome, there are companies that have been well positioned in the local market due to the products’ high quality as well as considerable low cost for the end users. Forel S.A. is considered one of those companies.
Forel S.A. operates in the women’s clothing industry. The parent company resides in Greece by exporting also in Cyprus, Lebanon, South Africa, Ireland, Switzerland and recently in Canada. Forel started its operations in 1986 in a partnership form and in 2006 Forel S.A. was created through the merger of two partnerships – Forel Businesses LLP and A.Chatzoulas LLP. The company currently employs 32 persons and owns three Forel retail stores in Greece and Cyprus. Their products are also distributed through 300 stores in Greece and abroad. It plans to focus more on the retail business since till now it was focusing by 90% on wholesales and 10% on retail. Forel’s clothes are targeting to women at an age range from 25 to 50 years old, having different lines for casual as well as formal outwear following a moderate to high pricing tactic.
By reviewing a survey made for the clothing industry operating in Greece, we have been able to gather various statistics for the industry. The survey titled “Analysis of financial statements of the Greek women...